Five reasons why you should apply for a loan for your next home improvement project
Do you have a great project that you have been thinking about undertaking but do not have the funds to do it? Whether it’s an addition, a new garage, finishing a basement or renovating the kitchen, you can’t do anything without adequate financial support. If your money is limited to the mortgage, car payments, tuition payments, groceries, etc. (And who’s not?), You may want to consider a personal loan to finance your next home improvement project.
It is an excellent idea. Why? You get the cash you need to do the job, increase the value of your home and modernize your living space, all backed by an affordable loan that you can easily afford.
Credit Direct wants to help homeowners achieve their dream home. We can grant you up to $ 40,000 in personal loans so you can remodel your kitchen with custom cabinets, high-end appliances, wood floors and granite countertops. You may be looking to expand your master bathroom with a hot tub, a walk-in shower and vanities for him and her. Or maybe you want to finally finish the basement so your children have a playroom and relax with their friends. In any case, these projects may be possible with a personal loan for home improvement.
Look at these five reasons why you should apply for a personal loan for your next home improvement project.
Your house is less at risk
The risks are simply lower with an unsecured personal loan. Why? Let’s say you can’t pay your home equity loan or line of credit. Your lender could seize the property because these types of loans have your home as collateral. Foreclosure is a serious issue and it is difficult to get afloat.
Yes, unsecured creditors may impose a lien on your home if you don’t pay them, but this will only make it harder for you to sell or refinance. Bankrate notes that real estate loans are loans without recourse, which means that the lender can use only the property as collateral for the debt; However, with a personal loan, the lender can look for other assets and sources of income of the borrower if the loan is not met.
Of course it is never a good idea to default on a loan. That said, an unsecured personal loan is a lower risk option if you are financially stable but face uncertainty in the future, such as possible layoffs in your workplace or a child who goes to college.
Will pay less interest
The repayment period of an unsecured personal loan is usually three to seven years. A line of credit with real estate guarantee (HELOC) generally has a withdrawal period of 10 years and a payment period of 20 years, with mortgage loans that grant you between 20 and 30 years to pay. This sounds good to the naked eye, but imagine all the interest you will pay during that time, even if you get a low rate.
Keeps your loan under control
With a personal loan of $ 40,000, you are not tempted to borrow more than you really need. The amount of a personal loan is set at the time of approval, unlike a HELOC, which allows you to apply for additional loans during the 10-year withdrawal period. On top of that, the minimum you should borrow is lower with a personal loan, which makes them a better option for lower-cost home improvements, such as new floors or heating, ventilation and air conditioning (HVAC) equipment.
The real estate guarantee is not a factor
If you are drowned in your mortgage or simply bought a house and are looking for a home equity loan or HELOC, you cannot do so because you have not accumulated any capital. With these loans, you must have 10 to 20 percent of capital remaining after the loan.
You can obtain an unsecured personal loan as long as you have not fully exhausted your debt / income ratio and have good credit.
You will pay less fees
Personal loans have origination fees, but you will not have to pay application, appraisal or annual title search, title insurance, mortgage preparation or filing fees. Nor will you have to pay points or early repayment fees as you would with a home equity loan or HELOC.