Home improvement Loan – We love to decorate our homes, and there are phases in our lives where perhaps we have spent too much time. Watching Food Food or TLC and have thus built castles in the air of visions of transforming our cuisine into a chef’s paradise.
Or maybe our main bathroom is just a shower of disaster. Because we really like Italian tiles in our bathrooms. And if so, well done, you are not alone.
Recently, the Joint Center of Housing Studies at Harvard University investigated. Reported that the home improvement industry is expected to continue to record record spending in 2020. For many people, this means borrow money to pay for well-planned home improvement and decorating plans. .
Now we have to face a difficult and perhaps hypothetical question.
So which home improvement loan is right for you?
Many homeowners and housewives seek to exploit equity in their homes. But home equity loans or home equity lines of credit may not be possible or very convenient for some borrowers. In this case, one should consider using a personal loan.
Although it is known that a personal loan can be used. Variety of reasons, there are several reasons why a personal loan can have advantages over home equity loans when it is available. # 39; s a home improvement loan, to be precise.
The personal loan application process is generally quite simple and fairly straightforward. Your own financial situation – for example, your credit history and earning capacity; This is often the main deciding factor in whether or not you can get a loan, for how much, and if so, at what interest rate. Some personal loans even boast of having no setup fees.
However, home equity loans or home improvement loans, on the other hand, are similar to applying for a mortgage (in fact, home equity loans are sometimes called second mortgages). The amount you can borrow depends on several factors, including the value of your home. Because you can only borrow against the capital you already have (that is, the difference between the value of your home and your mortgage), you may need to arrange – and pay for – a valuation of the House.
What Should Be Considered to Home Improvement Loan?
Now let’s see this case in the case of a home improvement loan. With a home equity loan or a home improvement loan, you can only borrow against the equity you have – which, as a new owner, is probably not much. You may not have had enough time to trim your mortgage and the market has not yet raised the price of your home. A personal loan allows you to start renovating your home, regardless of your capital. This is therefore one of the advantages of receiving a home improvement loan.
With a home equity loan, you are using your home as collateral, which means that an inability to repay could result in foreclosure of your home. Although not paying your personal loan comes with its own risks (like ruining your credit and credit score), it is not directly tied to the roof above your head, like a gun on your head. Therefore, it is better and safer to benefit from a personal loan.
Which one is better, safer and more suitable?
Personal loans may not be suitable for all borrowers looking for a home improvement loan. For example, if you have a large equity in your home and are looking to borrow a large amount, you could save money with lower interest rates on a home equity loan. In addition, interest on home equity loans and lines of credit may be tax deductible in certain circumstances; but this is clearly not the case with personal loans.
On the other hand, personal loans can make sense for these types of customers: –
- Recent home buyers.
- Small loans for home improvement (eg bathroom or kitchen as opposed to full renovation)
- Borrowers in low-value home markets (if the value of your home has barely changed since you moved in, you may not have a lot of capital to draw on for a home equity loan).
- For those who appreciate ease and speed.
- Borrowers with excellent credit and cash flow.
While home equity loans and lines of credit are a good source of money for home improvement if you’ve already built up equity in your home, a personal loan can be a better alternative if you are, for example, a new owner and need to take care of a few updates to make your new home just and perfect.
In conclusion, we conclude that a personal loan is a better option than a home improvement loan, at any time.