Whether it’s a new house or an old one and you want to renovate the property, look into home improvement loans. They can be used to pay for the necessary work that will make your home a more comfortable and efficient place to live. But what exactly is a home improvement loan, and how is it different from other loan types? Well, that’s what we’re here to answer.
What is a Home Improvement Loan?
Basically, home improvement loans are loans that are used to finance home improvement projects. This can come in the form of a personal loan, a home equity loan, or a home equity line of credit. The loan can be used for repairs, remodeling, home additions, or for a down payment. Basically, “home improvement” is defined broadly — it can be used for anything that improves the value and livability of the home. It can include:
- Home Add-Ons and Additional Rooms
- Home Appliances
- New Roofs and Windows
- New Flooring
- New Furnaces and Air Conditioners
- Water and Sewer Pipes
- Thermal Insulation
- Water Heaters
- Home Security Systems
- Surround Sound Systems
- Home Theater Systems
Why Use a Home Improvement Loan?
A home improvement loan is an excellent option for those who are trying to remodel their home. Gone are the days when you needed to wait for all your savings to come together for you to start the work. A home improvement loan is your opportunity to turn bad luck into good fortune.
Whether it’s because you lost your job and your income or due to medical bills, you need cash to pay for home improvement projects. A home improvement loan can be the solution to your problems.
Types of Home Improvement Loans
A different type of loan is used for home improvement projects. Home improvement loans are offered by different types of lenders and banks, so it is important that you research the options available to you.
A home improvement loan can be obtained from a number of sources, including banks, credit unions, and mortgage companies. In addition, you can use a personal loan to pay for home improvements. Personal loans are also called signature loans. They are also referred to as unsecured personal loans because the amount you’re borrowing is not secured against the value of your home. As such, these loans are much easier to get, and you can qualify for a much higher loan amount than you might with a home equity loan or home equity line of credit.
Home Equity Loans
A home equity loan is a type of loan that’s secured by your home. This means that the amount you’re borrowing is secured by your home and its value. This makes these loans much riskier to make, and they must be approved by your lender. They are also referred to as second mortgages. As such, you’ll have to pay attention to the rates and terms of the loan. Generally, you have to pay back the loan in 15 to 30 years.
Home equity loans are particularly suited to those who want to refinance their home. In addition, they can be used to pay for improvements to their home.
Home Equity Lines of Credit (HELOC)
These loans are also secured by your home, and they are considered more flexible than home equity loans because they are provided in an amount that you need. This loan is qualified when you first get the loan and can be paid back over time without the need for a formal application for amounts. However, it is essential to note that HELOCs are subject to changes in rates. If the interest rate goes up, you’ll have to pay a higher interest rate.
So, if you’re planning to get a home equity line of credit and plan to use it to pay for home improvements, it might be wise to get a fixed rate or a 1st or 2nd mortgage instead.
Your Experts at MidAmerica Bancorp
A home improvement loan can be a great solution when you want to make some changes to your home. Whether you want to remodel your kitchen, add a second bathroom, or extend your home, a home improvement loan can help you finance the work.
Finding the ideal home loan for home renovation or buying a new house should never be difficult. That’s why MidAmerica Bancorp, Inc. is here to make sure that applying for a loan is easy and hassle-free. We make it our mission to connect you with a loan option suited for your needs and budget. Contact us today at (708) 237-4050 to start the loan application process. We are licensed in Illinois, Indiana, Florida, and Wisconsin.