The rash of home improvement shows on television is a testament to how popular this activity is. Homeowners will have to do some renovations or remodeling at some point because of the need to live in comfort. The right residential remodeling project will also boost the property’s value.
Unfortunately, many remodeling or renovation projects are often put on hold due to budget constraints. It’s tempting to dip into your savings for small-scale improvements, but major repairs and upgrades can cost a pretty penny. HomeAdvisor reports that the average kitchen remodel nowadays has a price tag of $26,180 and major kitchen remodels may cost you approximately $70,000 to $130,000 or more. The good news is you can get a home improvement loan to fund these more significant upgrades.
What is a Home Improvement Loan?
A home improvement loan is a bit misleading at times because it’s not a specific loan designed for renovations or minor remodeling projects. It’s a personal loan or line of credit that’s used to finance home repairs. There are various kinds of loans that you can use. A personal loan or a HELOC are two examples. You can use these loans to fund all types of home repairs and upgrades.
Homeowners have five main loans they can use. These can finance residential construction and remodeling.
- Cash-Out Refinancing: This loan lets homeowners tap into the equity they’ve built. You must have around 20% equity before you can do a cash-out refinancing. Applying for this loan means you’ll be swapping your current mortgage for a new one.
- Government Financing: The HUD offers homeowners the chance to renovate their homes. They can do this with a Title I Property Improvement Loan. You can also get a 203(k) Rehabilitation Mortgage. It lets homeowners use around $35,000 of their mortgage for home remodeling projects.
- Home Equity Loan: As the name implies, you’ll use your home’s equity as collateral. You’ll get a lump sum that you’ll pay back in installments. The collateral means you’ll get a lower interest rate. This is a good option if you don’t have a high credit score.
- HELOC: A home equity line of credit (HELOC) loan uses your equity as collateral. This is a good option if you have an ongoing project and don’t have an exact price tag. The lender will provide you with spending flexibility akin to credit cards.
- Personal Loan: You need to have a positive credit score and a stable income to qualify for this loan. A personal loan also has higher interest rates compared to a HELOC. This is an ideal choice for those working within a set budget as you can apply for a specific amount.
Why You Should Apply for a Home Improvement Loan
Are you still on the fence on home improvement loans? These reasons should convince you to apply for this loan.
- Boost Property Value
The right home remodeling or renovation project can increase your home’s value. It can even make selling your home easier. You can’t do that without the finances to do the job well. The home upgrades can help you recover the cost of the loan. It can also help you make a tidy profit on the sale of the property.
- Flexible Use of Funds
One of the best things about a home improvement loan is its flexibility. You can use the loan for any purpose like adding a pool or hiring a landscape architect. You can also use it to make energy-efficient upgrades to your home. You’ll help save the environment while saving money on your energy bills.
- Pick the Best Loan for Your Needs
Home improvement projects vary in scope and pricing. That is why you should choose the right financing option. For example, a cash-out refinancing loan is great for extensive renovations. A HELOC is ideal if you plan on doing several projects
Here’s the Bottom Line
Residential construction needs careful planning and execution. That’s what Elegant Builders provides their clients. We’re one of the most trusted full-service construction companies in Wisconsin because of our dedication to making our client’s dream homes a reality. Our customized service means we’ll be there every step of the way. Our team of experts has been in the industry for years. We’re all licensed and insured. We specialize in home remodeling. We also do structural repairs and offer hardware solutions. You can reach us at (262) 825-4777. You can also message us here and ask for a free estimate.
