The home improvement industry has become a big business and many of the best home projects to increase equity in your home are expensive to pay for all at once. Most large home improvement projects, whether you’re hiring a contractor or a do-it-yourself home improvement fan, will require some sort of home improvement loan or financing.
Discovering out how much a home improvement project is going to cost is just the first step in figuring out whether or not you’ll be able to afford the home improvement. Once you have a general price you need to begin examining the different payment amounts, available interest rates and other terms of the loan to pick the best home improvement loan for you.
Before signing for a home improvement loan or working out any sort of deal on home improvement financing you should definitely work do a little homework to make sure you’re really getting the best deal you can. You can use one of the many online free home improvement loan calculators before you start talking to a lending institution so that you know exactly the type of loan you want.
You will need a couple of pieces of basic information before you use a home improvement loan calculator. You will need to know the type of loan you’re interested in, the type of home, a general assessment of your credit rating and where the home is located. Then you’ll need to know your home improvement project costs and some general information about down payments.
The best part about using a home improvement loan calculator is that most are free and don’t require any sort of commitment. Some home improvement loan calculators are sponsored by banks and lending institutions, but they do charge you require any sort of committment until you actually sign the dotted line.
Don’t worry if you don’t have all the specifics when you’re working with a home improvement loan calcutor. These online calculators make changing loan information and looking at different payment scenarios very easy and self-explanatory.
Online home improvement loan calculators can give you a pretty good idea of what you’ll end up paying per month for a large home improvement project as well as the overall total cost of the project. Understand, however, that there may be some small servicing and processing fees associated with any home improvement loan that you may or may not be able to enter into the home improvement loan calculators.
The bottom line: online home improvement loan calculators are a great way to figure out what you’ll pay for different types of home improvement financing products. You should always talk with your home improvement loan lender to get the final numbers, but these online calculators can help you negotiate a much better deal by being more knowledgeable during the home improvement loan application process.
When you start researching home improvement financing you’ll quickly learn that there are different ways to borrow money for home improvements. The two general types of loans are often categorized as “secured” and “unsecured” loans.
Unsecured loans are loans which are given to you based on your credit rating and not based on anything you have to offer up for collateral. Your credit rating is really nothing more than a measure of your historical ability to pay off debts and money given to you in the past. If you’ve always paid your bills on time and always pay back debt then you probably have a pretty good credit rating. By financing your home improvement projects with an unsecured loan of some type you will be paying the loan off without any sort of collateral offered to the bank. A credit card, even a credit card from a home improvement hardware store, is usually considered an unsecured loan.
Secure loans are loans in which the bank or lending institution have some sort of collateral or item which they technically “own” until you pay it off. When you finance car payments or buy a house with a mortgage the bank technically owns your car or home until you’ve paid off the debt amount plus interest. Your house is the collateral. If you default on your loan then the bank can take your house or car and sell it in an effort to regain some of the money they lent you.
Unsecured loans are good for small home improvement loans which you can pay off quickly. Home improvement store credit cards are good to use for small home improvement projects that are under $1,000 because the application process is usually fairly easy. Sometimes those home improvement store credit cards even offer zero percent interest or discounts on merchandise for a fixed period of time.
When you’re exploring larger home improvement financing options you’re almost always going to end up with some sort of secured loan because most of the time the equity or “extra value” in your house is used as collateral for a loan to improve it.
Secured home improvement loans such as home equity loans and home equity lines of credit generally have a lower interest rate, which makes paying them off easier over the long run. There is often more paperwork and a longer delay associated with secured loans because they are so much larger than most secured loans. Depending on your tax situation you may even be able to deduct the interest you pay on the secured home improvement loan from your yearly income tax returns.
No matter what type of home improvement financing you consider remember that you do have to pay the money back and you will be paying interest on the money owed. Plan ahead and make sure you can really afford the monthly payments before you go forward with your home improvement project. Many home improvement plans are scaled back when people finally begin to consider the true cost of home improvement financing.
If your home improvement project is a rather large one such as remodeling a kitchen, adding a bathroom or building an addition on your house then a secured loan that offers up your home’s equity as collateral is the best form of home improvement financing.