Home Improvement

Products available for home improvment vary widely. You may do an Home Equity/Line of Credit , a closed-end 2nd Mortgage , an after-value loan, a first mortgage, or a host of other equity products. What you want to accomplish, how long it will take, how much equity you currently have available and how much you can afford are among the most important considerations when choosing a loan product. While trying to accomodate what you want to do, you must also be aware of what you qualify to do. The guidelines for these products are "lender specific." This means that there are literally thousands of lenders to help you with your project, but each will have their own list of qualifications. All lenders will be looking at your credit, income, property, assets and the improvements you plan to make. It is absolutely critical that you not begin your project before you obtain financing. It is nearly impossible to find financing once you've torn down walls, stripped floors or dug holes (just to name a few starting points). Explore several different lending solutions and make sure you have a long term plan for when your project is complete. If you are interested in construction financing .

The purpose of the home improvement loan

The home improvement loan is designed for exactly that – to make improvements to the home. This can mean a wide range of things. Some examples of projects completed with the money obtained from a home improvement loan include:

• Adding or enlarging a room
• Building a deck
• Enclosing a patio
• Funding a swimming pool
• General repairs
• Repainting and redecorating
• Updating plumbing

The home financing situation

The interest rate, total loan amount and length of loan life are going to be dependent upon the lending institution and the current real estate market. They will also depend upon the details of the first mortgage, the exact purpose of the home improvement loan, borrower credit history and the value of the home. In general, the home improvement loan is a short-term loan which requires only interest-only payments during the period of home construction. The interest rates are usually lower than those of a private loan such as a line of credit but vary according to all of the above factors.
Using the home to profit from the home

The home improvement loan uses the home as equity for financing of the loan. With proper repayment of the home improvement loan, it is actually possible to profit off of the loan. This works when the value of the home improvement in terms of the rental or real estate market brings in more money than the total cost of the loan to the borrower. Because real estate market values frequently rise, this is often the case with a good home improvement loan.