There are many different ways to borrow cash for a home improvement project, but essentially your options come down to a "secured" or "unsecured" financing vehicle. These two types of loans have advantages and disadvantages.
Unsecured loans are loans which are given to you based on your credit rating and not based on any single thing you offer up for collateral. Your credit rating is really a measure of your historical ability to pay off what you've owed in the past. If you've always paid your bills on time then you probably have a pretty good credit rating. A credit card, even a credit card from a hardware store, is usually considered an unsecured loan. You generally don't have to have equity to get an unsecured house improvement loan.
Hardware store credit cards are good to use for small home improvement projects that are under $1,000 because the application process is usually fairly simple. These credit cards are the most common types of unsecured loans for house improvements. You can sometimes qualify for a zero percent interest rate on some cards for six months.
Secure loans are loans in which the lending institution has some sort of collateral or item which they technically "own" until you pay it off. When you finance a motorcycle or buy a house with a mortgage the bank technically owns what you bought until you've paid off the debt amount plus interest. With a secured house improvement loan your house is the collateral. If you default on your loan then the bank can take your house or car and sell it in an effort to regain some of the money they lent you.
Secured home improvement loans often have more paperwork but they also usually offer a lower interest rate because they are more safe for lending companies to give out due to the collateral involved. You may even be able to deduct the home improvement loan interest amount from your income taxes!
Whichever type of house improvement financing you consider remember that you do have to pay the money back and you will be paying interest on the money you borrowed. Be sure to thoroughly research all your loan options. Many home improvement plans are revised when people finally begin to understand how home improvement loans work. - 29904
Unsecured loans are loans which are given to you based on your credit rating and not based on any single thing you offer up for collateral. Your credit rating is really a measure of your historical ability to pay off what you've owed in the past. If you've always paid your bills on time then you probably have a pretty good credit rating. A credit card, even a credit card from a hardware store, is usually considered an unsecured loan. You generally don't have to have equity to get an unsecured house improvement loan.
Hardware store credit cards are good to use for small home improvement projects that are under $1,000 because the application process is usually fairly simple. These credit cards are the most common types of unsecured loans for house improvements. You can sometimes qualify for a zero percent interest rate on some cards for six months.
Secure loans are loans in which the lending institution has some sort of collateral or item which they technically "own" until you pay it off. When you finance a motorcycle or buy a house with a mortgage the bank technically owns what you bought until you've paid off the debt amount plus interest. With a secured house improvement loan your house is the collateral. If you default on your loan then the bank can take your house or car and sell it in an effort to regain some of the money they lent you.
Secured home improvement loans often have more paperwork but they also usually offer a lower interest rate because they are more safe for lending companies to give out due to the collateral involved. You may even be able to deduct the home improvement loan interest amount from your income taxes!
Whichever type of house improvement financing you consider remember that you do have to pay the money back and you will be paying interest on the money you borrowed. Be sure to thoroughly research all your loan options. Many home improvement plans are revised when people finally begin to understand how home improvement loans work. - 29904
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Want to learn more about how you can pay for that home improvement? Be sure to read about other home remodeling loan programs that are available.
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