HOME RENOVATION FINANCING
IN MINNESOTA
Need Work Done On Your House? Financing A Home That Needs Renovation?
NorthPort’s Got You Covered!
What Is A Home Improvement Loan?
Things break - that’s an inevitability. Even if you take the greatest care of your household, eventually a remodel will be in order.
A home improvement loan helps you improve your quality of life immediately.
A home improvement loan can help you:
-
Add value to your property
-
Increase the comfort and living standard
-
Turn your house into a home
The Three Types Of Home Improvement Loans:
There is no legal or official definition of a home improvement loan. It’s just a loan you take to finance your home repairs.
Here are three most common ways you can get your home renovation financed.
-
Personal loan
-
Home equity loan
-
Home equity line of credit (HELOC)
Personal Loans For Home Improvement
A personal loan is the most common way to find money to improve your household. The ‘personal’ part means that it’s not tied to any collateral - if you fail to keep up with your payments you won’t lose your house.
Seeing as though it’s an unsecured loan, personal loans usually carry higher interest. Contact us to find out what we can do for you!
Personal loan benefits:
-
You pay in fixed monthly increments
-
You don’t have to use home equity
-
The loans can be finalized much quicker
Personal loan drawbacks
-
Higher interest rates
-
You may have a hard time approving them
HOME EQUITY LOANS FOR HOME IMPROVEMENT
If you have equity in your house, you can put it up as collateral for a loan. This makes it much more likely that you will be approved, although the approval process may be more complicated.
Seeing as though equity can be defined as ‘the part of your mortgage that you’ve paid off’, taking out a home equity loan is like taking up a second mortgage. This makes the underwriting more difficult, and closing costs may occur.
It also means the amount you will be able to loan depends on the amount of equity you have on your property.
Home equity loan benefits:
-
A secured loan means a lower interest rate
-
You pay in fixed monthly increments
Home equity loan drawbacks:
-
You must have equity in your home
-
You will probably incur closing costs
-
You may have to allow for an inspection of your home
Home Equity Line Of Credit (HELOC) For Home Improvement
Taking out a home equity line of credit is sort of like taking out a home equity loan and applying for a new credit card at the same time.
When approved for a HELOC, you get access to a limited amount of funds that you can withdraw as you please, and pay back with interest. Just like a credit card.
It may be the best way to borrow money for a home renovation. Home improvement jobs usually take time, and HELOCs allow you to borrow money at your own pace and not in one large lump.
HELOCs are secured by equity in your property, so the interest rates are usually lower than for personal loans.
The underwriting process is more difficult, however, and you may need to allow for a home inspection. You will also suffer closing costs and the payments may change as you take out more money.
HELOC benefits:
-
Lower interest rates
-
Borrow money over time as you need it, not in one lump sum
HELOC drawbacks:
-
Installments may change
-
You have to have home equity
-
Closing costs and a harder underwriting process