A “home improvement loan” is usually an unsecured personal loan that is used to pay for home repairs and improvements. An unsecured loan does not require you to put up an asset, such as your house, as collateral. Home improvement loans can range from $1,000 to $100,000, with interest rates from 5.99 percent to around 36 percent if your credit is bad. Personal loans have a fixed interest rate and a fixed monthly payment and are available at traditional banks, credit unions, online lenders and peer-to-peer lenders.
If you have planned a renovation with a mock budget and know what the end total looks like, a good first step is to evaluate whether it's feasible to fund with cash. Creating this budget will not only help you pinpoint your expenses, but if you end up going with a loan, it will be an integral step in showing lenders that you’re prepared for the renovations.
It’s hard to imagine a scenario in which it makes sense to pay 30% interest to make a home improvement. But if you’re desperate, a peer-to-peer loan with a high interest rate can be a better option than charging the expense to a credit card with a high interest rate because you’ll be forced to repay the peer-to-peer loan within a few years, unlike a credit card balance, which you can drag out and pay interest on forever.
For financing the loan the home is used as equity. Usually, value of a home increases on the completion of the home improvements. This can actually be profitable. With proper repayment of the home improvement loan it is profitable. Real estate values are always on the rise. Before the home improvement loan is acquired it is absolutely necessary not to tamper the existing house in any way. A long-term plan is advisable.
Disclaimer: All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 6.95% to 35.89%. For example, you could receive a loan of $5,700 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. *The origination fee ranges from 1% to 6%; the average origination fee is 5.2% (as of 12/5/18 YTD).* There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
With a low home improvement loan rate available, now's the perfect time to get started on those remodeling projects you've been putting off. However, while you're renovating your home, be careful not to add things that would price your home out of the range of your neighborhood. For example, if you own a bungalow in a neighborhood where sale prices don't top $125,000, reconsider adding a master suite fit for a mansion. You may not recoup that investment when buyers can get very similar homes on the same street for less. Even in a neighborhood where homes sell for $1 million, adding exotic hardwood floors or marble drives and walkways could still push your home's price higher than the average, making it harder for you to sell someday.
Whether you want to spruce up your home, do a total renovation or just fix up that outdated bathroom, you're probably bracing yourself for steep home improvement costs. If you've built equity in your home, however, you can access that equity for those new countertops or landscaping with a home improvement loan. These home renovation loans feature low interest rates and repayment periods that can bring your dream renovations within reach. Put your low home improvement loan rate to work and liven up your living space with these great remodeling tips.
*Credit scores are based on information collected by credit bureaus and information reported each month by your creditors about the balances you owe and the timing of your payments. A credit score is a compilation of all this information converted into a number that helps a lender to determine the likelihood that you will repay the loan on schedule. The credit score is calculated by the credit bureau, not by the lender. Credit scores are calculated by comparing your credit history with millions of other consumers.