What Everyone Should Know About Home Improvement Loans
What Everyone Should Know About Home Improvement Loans.
How to Find the Right Financing Solution for You.
For many, financing can be a strange and confusing journey. If you don’t have cash immediately on hand, discovering the most suitable option for your home renovation begins with knowing what is available.
While there is no right answer, finding financing that fits your needs will help to make your life easier in the long run. We have compiled a few different financing solutions to consider to help along the way.
Financing Solutions to Fit Your Needs
Restoration Society, Heritage Home Program:
The Heritage Home Program offers low-interest loans for homes 50 years or older in qualifying locations within Cuyahoga County. To qualify, a homeowner will need to be current and up to date on all payments and taxes, and the renovation must fit within certain specifications. While you will generally want to already have equity in your home, there are also options available to finance based on a post-renovation home value. The approval time for these types of loans may be lengthy, and because of the stipulations, all may not be approved. We recommend having plenty of research under your belt to ensure your home and renovation meet the guidelines!
Home Equity Loan or Line of credit
Both a home equity loan and a line of credit require having equity in your home, though you have the ability to choose either option.
A home equity loan, also known as a 2nd mortgage, offers a one-time lump sum, typically secured at a lower interest rate than a line of credit. Your max loan amount is 80% of your home value minus what is still owed on the mortgage.
A home equity line of credit offers a revolving flow of money, very similar to a credit card. The interest rate may be higher than a home equity loan but allows flexibility to use what you need when you need it.
Keep in mind, with this type of loan your home is up for collateral, so missing payments may really hurt you!
Home improvement loan
A home improvement loan offers quick funding where the final loan amount is not based on your home equity, which means the amount you can borrow may be exponentially more depending on your financial situation. This is an unsecured loan, which means it will not require any type of collateral, so approval is based on your credit score and other factors typically considered when borrowing money. This type of loan will likely come with higher interest rates than the previously discussed options.
Credit Card
A credit card is an option that may already be available without any additional leg work. While interest rates will be higher than the other solutions we’ve discussed, you may be able to leverage perks such as credit card points, cash back, or air miles. This may be a good option if you have money saved up, or lucrative investments that would allow a balance to be paid down in a short period of time.
Wondering what to do next?
You can reach out to one of these resources to find great solutions to fit your lifestyle.
Heritage Home Program