Home Improvement Loan-What you Need to Know
A home equity loan, also sometimes known as a home improvement loan, is typically utilized by homeowners who want to make large additions or repairs to their home.
Purposes for Home Improvement Loans
When a homeowner plans to make large repairs or improvements to their home the existing home can often be used as collateral for a loan in order to obtain the proceeds necessary to fund those endeavors. Examples of typical home improvement projects which a home improvement loan may be used for include:
- Landscaping improvements such as adding an outdoor living space or deck
- Replacing the roof
- Making structural repairs to the home
- Adding a pool
- Remodeling a bathroom
- Remodeling a kitchen
- Adding a room
In addition to the above mentioned projects homeowners may also consider seeking a home improvement project for combination projects. Homeowners may also find it necessary to seek a home improvement loan in the even there is serious damage to the home due to a natural disaster. Most lenders do require that homeowners carry a minimum amount of insurance that would cover damages in these types of situations; however. In the event there is a sizeable deductible homeowners could use the home improvement loan to pay it.
Repaying Home Improvement Loans
In most cases a home improvement loan is repaid in much the same way as any other type of loan. There is a specified interest rate and time period during which the loan must be repaid. The homeowner will repay a portion of the principle in addition to interest each month. The amount of monthly payments as well as the length of the repayment period will generally be related to the amount of the loan. For example, larger home improvement loans will commonly have longer repayment periods along with higher monthly payments. Conversely, a smaller home improvement loan would have a smaller monthly payment and shorter repayment period.