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Personal Loans for Home Improvement

Posted December 14th, 2009
by PersonalLoans.org Staff

HomeImprovmentIn today’s economic environment, finding the cash to do some repairs around the house or to add a room can be something of a struggle. Even if you’re doing all right financially, chances are you don’t have a sizable chunk of cash to spend on major repairs or home improvements. That’s why folks are turning more and more to personal loans to make their home improvements.

What a home improvement loan does

Home improvement loans are, in the most basic sense, loans used to improve your house or your property. They work financed by these loans should either maintain or increase the value of your house. They might include things like structural repairs, redoing your kitchen or a bathroom, or improvements to the property. Even landscaping or the addition of a swimming pool may be considered to be a home improvement.

Types of home improvement loans

There are a few different options available to folks who want to improve their homes. Here are some of them:

  • A first mortgage. This is a home loan you take when buying the home. It may include a certain amount of money for home improvements designed to increase the value of the home.
  • A second mortgage. Also known as a “home equity loan” or sometimes a “home equity line of credit,” this kind of loan is borrowed against the equity in your home.
  • Refinancing. Some folks may be able to refinance their home to take advantage of some of the equity in their home. They can then use that equity for home improvements.
  • Personal loans. These are unsecured loans, sometimes also known as “signature loans,” that you take out for the purpose of home improvements.

First steps

Before you start the home improvement loan process, however, you need to know what you’re going to do with the money. You need to have a detailed plan, along with estimates for the costs of the improvements. If possible, you should also have an estimate of how much and in what way the home improvements will increase the value of your home. This may help build the case with the lender.

There are some other specific kinds of things you need to think about, too. You need to figure out whether the improvements will increase the value of the home more than the amount of the loan. If not, you need to identify what kind of benefit you’ll get that’s  not monetary from the improvements. You’ll also want to find out what the monthly payments on the loan will be, as well as what the terms will be on the loan. You should have some idea of how it may affect your taxes, and what tax deductions the improvements or the loans may make you eligible for.

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