Home Loan Info

Assisting You In Your Home Loan

Home Improvement Loan

One seldom hears the term home improvement loan used, but rather it’s home equity loan or other such terminology. Home improvement loan is too confining, it seems, so everyone wants to broaden the term to cover more area.

Whatever you choose to call your home improvement loan, the most important thing to remember is that it is just as important as your home loan because it will also be attached to your home as a second mortgage. Just like you will lose your home if you default on your mortgage payments, you can lose it if you default on the payments on your home improvement loan. Therefore, do not take on any more than you can handle simply because you just “have to have” that built in pool, or garage, or addition to the house.

A home improvement loan is not going to carry the same interest rate as your primary mortgage payment, even though you may put up the equity in your home as collateral for the loan. Depending on the lender and your credit, you can pay anywhere from around 9% to 12% or more. Additionally, it is doubtful that you are going to get a 30 year payment on a home improvement loan, though depending on the amount of the loan you might get ten or twelve years, possibly more. That is something you must keep in mind before you even begin to think about arranging to have the improvements completed.

Do not assume that the bank where your primary mortgage is held will be the best place to shop for your home improvement loan. There are lenders in every state who do nothing but finance home improvements, and since they specialize in this area, you may get a better rate of interest. In addition, with the advent of the Internet, you can apply on line and have lenders “bidding” for your services. By doing this, you may get a lower rate than in your local area because banks will be competing, and each of them will be trying to underbid the other – this is what you want.