At times home renovations are very expensive and time consuming. Fortunately, there are a number of financial institutions that offer home improvement loans to homeowner and real estate investors. One of the major benefits of carrying out renovations is that they add value to your home, especially if you intend to sell it in the near future.


Here are some things that you should do in order to increase your chances of qualifying for renovation loans.


Get you know your credit rating: This is one of the supreme factors that financial institutions look at when issuing loans. It is paramount importance to know your credit rating or score before applying by requesting for a credit report. A high credit rating will surely increase your chances of qualifying for the loan. Late payment of bills can harm your score, hence make sure that you pay all your bills and repay loans on time. It is also important to note that there are banks that offer home improvement loans that are specifically designed for clients with poor credit score.


Gather all your records: More often than not, the financiers usually ask for various personal documents such as social security card, driving license, identification card and the list continues. It is prudent to have all these documents ready just in case your selected bank requests for them. Be sure to check all the requested documents for any inaccuracies that could hinder you from getting the loan.


Estimate the cost of the project: Failing to plan is planning to fail. Estimate the total amount of money required to carry out the entire project. This will help you determine the size of remodeling loans that you need. Some of the factors that you should consider when budgeting include the cost of materials and equipment to be used. If you intend to hire professional home renovation contractors, include their quotes in the budget.


Let us proceed and look at some of the hidden factors that you should know about renovation loans


Interest rates: This is usually dependent on the size of the loan and other specific terms and conditions stipulated in the agreement document. It is usually presented as a percentage. Note that different banks that offer home improvement loans charge varying interest rates. Hence, it is important to compare and contrast the rates so as to choose one which is affordable, and within your financial reach. You do not to walk from one bank to another to get information on interest rate, you can accurate do so by visiting from the comfort of your home or office. Their database is updated on a daily basis hence you can rest assured that the results are accurate. One major factor that determines the interest rate charged on a home improvement loan is inflation. High inflations leads to high interest rates and verse versa. Other factors include credit risk, tax requirements, time and convertibility of your selected loan. Your credit rating will determine the credit risk attached to the loan. High credit score results in a lower interest rates, hence improving your credit score can enable you to get a lower interest rate. As mentioned earlier, you can do this by repaying all your outstanding loans and bills on time always.


Secured or Unsecured loan, which is the best? This is one of the most common questions among homeowners seeking this type of loans. Unsecured loans are usually more expensive than secured loans. For example if you apply for a secured loan, the bank may allow you to use 125% of the total value of your home as a guarantee of repayment. Unsecured loans do not require any guarantee and this explains why they are more expensive. However, you can still acquire these loans without enough equity as the renovations will in the long run boost the overall value of the house.


Contract clauses: The terms and conditions that govern the provision of remodeling loans vary from one financial institution to another. There are some that will request you to show proof of improvements or renovations that you intend to carry out. Your loan may be cancelled if you carry out improvements that are articulated in the agreement.


Bottom line; read and comprehend the contract to derive maximum utility from the loan.


Repayment terms: This refers to the amount of money that you will be paying on a monthly or annual basis to the bank after completion of the project. It is usually dependent on the size of the loan and your financial capability. They will consider your monthly income when structuring a repayment plan for you. It is recommendable to repay the loan as soon as possible to save money on the interest rates. Your selected bank may lower your rates if you consistently service the loan for one year or so without fail.


Here are some of the best US banks and sites that offer good remodeling loans at a fair interest rate.


Barclays Bank

Wells Fargo Bank


Bank of America

Chase Bank

Citigroup Bank

Use home improvement loans today to give your home a new modern touch of class and elegance.



Comments are closed.