Home repair loans are high in demand and with so many terms and conditions to consider, the process of applying for financing can be overwhelming, to say the least. In many situations, this financial decision will be a good one, even if you have grown equity and paid a mortgage on your property.
How, you ask? Well, borrowing from equity could strip you of valuable financial assets later down the line and (should you be in debt), this precious resource could have been your only option of financing. Home renovation loans, on the other hand, allow for fast money and stress-free repayments.
Since home improvement is one of the best ways of maximizing home equity, take heed and avoid falling into an equity trap. Instead, take the first step in sprucing up your home. Loans are such a worthwhile investment that lenders issued the highest number of loans at the end of October 2016 to borrowers with low credit since the serious recession that occurred from 2007-2008!
Of course, every loan comes with an interest rate. Don’t let this put you off, however. After all, a home renovation that you cannot afford will leave you in a state of stress and financial pressure, whereas a home improvement loan could speed up the renovation process and increase your property’s sale price, if you decide to put it on the market. In addition to this, you can restore a poor credit rating when you are capable of making timely loan repayments.
The Pros of Applying for Personal Loans
Being in a financially difficult situation may leave you feeling slightly embarrassed. What are people going to say when they know you’ve borrowed money for personal reasons? Well, that will be the least of your worries, since personal loans can be applied for discreetly and in confidence. Unless you want somebody to know, the whole thing can be kept a secret, with just you and your designated financial advisor communicating until the payment plan is finalized.
Here are some other pros associated with home repair loans:
Let’s say, for example, a storm caused extreme damage to your home and you’re in need of emergency funds. Personal loans make it possible to obtain funds quickly and easily.
No Credit Issues –
As long as you are prepared to pay back the money you borrowed for a home repair job, your credit rating will not take a hit. In fact, prompt and regular payments might actually improve your credit score.
Low Interest Rates –
Shop around and you could consolidate any existing high-interest debts, not to mention afford home improvements with a low-interest rate loan.
Use the Money Diversely-
You will be in control of what you spend the funds on, such as modern bathroom fixtures, bedroom furnishings or electrical appliances.
Debunking the Myths About Getting a Loan
Forget what you’ve heard, because there are a lot of myths and misconceptions surrounding the topic of loans. Let’s clear up a few things, shall we?
Perfect Credit is Not Necessary –
Strong credit ensures low interest, but poor credit can be overlooked if you can prove you pay other bills consistently.
Down Payments Not Necessary –
Some lenders may ask for a 20% down payment, but some lenders require nothing at all. Shop around to avoid getting ripped off.
Outstanding Debts Don’t Matter –
Of course, the lender is going to look at your debt-to-income (DTI) ratio to ascertain how capable you are at repaying a loan. Nevertheless, you can still apply if you owe outstanding bills.
Are you eligible to receive home repair loans?
Home repair loans are without a doubt one of the most valuable financial tools out there. Nonetheless, this form of financing isn’t granted to everybody. Your financial circumstances will be the main point of interest for a lender who is reviewing your application, from your bank statements and pay stubs, to any outstanding debts you might have.
Provided you can afford the monthly repayments calculated for the loan amount/duration, you will more than likely be eligible to receive the funds. Keep in mind that the ‘riskier’ you are as a borrower, the higher your interest rate will probably be. Use a loan repayment calculator tool on your smartphone or a computer for an accurate estimate.
Five Ideas for Making the Most of Your Loan
The day you are approved a home repair loan will be an exciting moment, because this means you are one step closer to having your renovation dreams turned into reality!
Rather than getting overexcited and splashing the cash on the first things that catch your eye, take inspiration from these five value-boosting home improvement ideas:
1. Kitchen Remodel –
This room is the ‘heart of the home’ and if you can renovate it in a way that is both functional and timeless, you’re onto a winner.
2. Ensuite Bathroom –
A property featuring bedrooms with adjoined bathrooms will have an element of privacy and luxury that influences the overall value.
3. Basement Revamp –
Why not rent out an extra room by turning the basement into an extra living space?
4. Solar Power Appliances –
Slash your monthly electricity bill in half by using solar to power lights around the home.
5. Oversized Windows –
Welcome maximum levels of natural light into the home and admire natural views from the comfort of your sofa.
What can affect the acceptance rate of home repair loans?
All it takes is a few minutes to apply for a loan nowadays, what with so many companies allowing borrowers to qualify for home repair loans online. Acceptance rate is dependent on your job status, credit score and the amount of money you are requesting. Do yourself a favor and gather necessary documents, such as proof of identity (passport or driving license will suffice), proof of residence, utility bills and bank statements dating back at least three months. By preparing in this way, you can prevent delays with the application process.