Home improvement projects don’t have to be small little jobs you finish on the weekend. With the rate of home sales still low, many people are starting to improve the houses they live in, and they’re doing it with major upgrades and remodeling projects that require fair amounts of money.
Many home improvement projects require some sort of financial loan because they are large scale projects that require payment on materials or labor all at once in order to get the project started. These larger home improvement projects require some sort of bank or lender issued home improvement money.
Paying for a new bathroom, upgraded kitchen or refinished basement is not easy for most people unless they borrow money to complete the project. Some expensive home improvements are not luxuries as much as they are necessities such as replacing a heating system or furnace, installing a new roof or simply updating old plumbing and electrical systems.
There are lots of different options and variables to consider when planning a large house remodeling project and working out a plan to pay for that project should be one of your first objectives. Home improvement loans, like most loans, can actually be broken into two general categories:
Unsecured home improvement project loan: You can get a loan that doesn’t require you to put up anything of value as collateral. These loans are called “unsecured” and they are often small loans based on your income and credit score. Credit cards can be used as a type of home improvement loans and some credit cards are specially designed just for this purpose.
Secured home improvement financing: A secured loan of any type is a loan which involves you offering something to the bank in exchange for the money. If you get a home improvement loan based on the equity in your home, then you are really trading part of the ownership in your house to the lending institution. As you repay the loan you are buying back your house. Secured home improvement loans usually involve larger amounts of money but do have a lower interest rate and offer a longer time to pay it off.
Even if you have bad credit or very little equity in your home you can still sometimes take out a small home improvement loan without much trouble. Borrowing money to improve the home you own is often seen as a much safer option for many banks than borrowing money to purchase a new home entirely.