Home Improvement
A home renovation loan is an unsecured personal loan you would use for home renovation projects. We will help you to finance your refurbishment!
Remodel Your Home with a Renovation Loan
Planning a home renovation is a big deal. There is budgeting, calling contractors, and securing financing. However, renovation cannot only increase the equity on your house or condo, but can also have a massive impact on the place you call home.
You want to do it right, and while you are investing, you want to make a profit when it is time to sell. Whether you have been dreaming of your next renovation project since you have moved in, or you have just recently caught the renovation bug: Selecting the right projects for your house, and the financing that best fits your budget, are important to consider before you start.
If you are ready to retrofit the basement, remodel your kitchen, or even update your property’s energy-efficiency, there is a best option to pay for it. In many cases, this is a home renovation loan.
Which Upgrades Can I Use a Home Renovation Loan For?
Home renovations can be small like rewiring or a fresh coat of paint. For those small refurbishing projects, you may be able to tap into your savings. But there can also be massive restorations that transform your entire house, like a new addition or a kitchen remodel. For those larger renovations, drying out a hard-earned savings account might not be the right choice.
Even if you are still shopping around for an estimate, understanding what you can do with a home renovation loan will help you make decisions. Here are some types of upgrades you can make to your house with a renovation loan:
1. Adding a New Deck or Porch
Not only could you boost curb appeal with a new deck or porch, but adding an addition can also increase your property’s value. Even a small loan amount invested well can work wonders in the years to come.
2. Kitchen or Bathroom Remodel
Itching to finally replace your dated kitchen cabinets with something fresh? Kitchen and bathroom remodels are among the most expensive renovations but can significantly add up in value when you focus on utility and style. Consider a home renovation loan before you start refurbishing.
3. Full Restorations
So maybe that property built in the 1970s requires major restorations, like replacing deteriorating posts and bringing insulation up to code. These projects count as home renovations, too!
4. Rewiring and Energy Upgrades
Making your house more energy-efficient can save hundreds of dollars a month on energy bills. So you might consider a short-term expense for rewiring or other upgrades to save money in the long run.
P.S. You can also check out our Guide to Choosing Your Next Home Improvement Project.
Why Should I Take Out a Personal Loan for Home Renovations?
In our opinion, a personal loan is the best option you have for financing your dream renovation. Let us take a look at the different options with their pros and cons to help you understand:
Credit Cards
If you have access to a credit line, paying for large home renovations with a credit card is an easy option. With credit cards, there is a limit on how much you can place on the card. Also, you have a set time period between making the purchase and your bill’s due date to pay off the purchase before compounding interest.
On the other hand, that can exponentially increase the cost and while a credit card is quick, it is anything but easy if there is a high-interest rate. Often there is also a short period of time to pay it off.
Bottom line: With most credit cards, you will face high compounding interest and a due date for the full cost at the end of the month.
Home Equity Loans and Lines of Credit
Home Equity Loans and Home Equity Lines of Credit (HELOC) are secured loans that banks issue when customers want to invest in their house. Getting a Home Equity Loan or HELOC means not only placing your domicile as collateral, but it will usually require a home appraisal. This can take weeks to request and process.
In addition to the cost of waiting for a home appraisal, the process of obtaining a Home Equity Loan or HELOC usually includes fees and closing costs. Even if you plan to build equity on your property, you still may spend a lot of money up front just to get a Home Equity Loan or HELOC, not to mention actually paying for your repairs.
Bottom line: With Home Equity Loans and HELOCs, you will not only pay for up-front appraisals, but you will likely need to wait weeks to months to be approved. You will also have to deal with a HELOC variable interest rate.
FHA 203(k) Loans
An FHA 203(k) Loan is a mortgage loan insured by the US Federal Housing Administration (FHA) and provided by an FHA-approved lender. 203k Loans are an option for homeowners who know they are purchasing a house that needs a lot of renovations before they move in. If approved, an FHA 203(k) Loan typically has low-interest rates. However, these loans require a lot of paperwork and appraisals. All renovations, large and small, need to be completed within six months.
Bottom line: You will be filling out a ton of paperwork to make an FHA 203(k) Loan work for renovation. Also, they come with very strict terms and little flexibility on how you can use the money.
Personal Loans
Like credit cards, personal loans are a quick way to access the money you need for renovating, but they usually come with lower rates. With a personal loan, you will get to pay a fixed monthly payment for the loan amount, with a fixed Annual Percentage Rate (APR) over the course of a few years.
You can get a Best Egg Home Renovation Loan without appraisals or long processes, and you could have your money in as little as one business day. Use your money the way you need to: paying your contractor, designer, or paying for materials to get the job done yourself.
Bottom line: There are different loan options for you, with customized loan amounts or interest rates. With a Best Egg Personal Loan, you can access money quickly, and make paying for renovations simple.
Begin Planning and Budgeting for Your Home Renovation Today
You should not have to jump through hoops just to pay for the projects you want to get started on. While home renovations need smart planning and budgeting, you are more than prepared to take on this new challenge. Best Egg wants to help you to avoid paying too much for your next refurbishment. Check your rates and loan options now and see what you can do with a Best Egg Home Renovation Loan!
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.