Oppussingslån – Home Improvement Loans

Home Improvement Loans 

If you have just bought your dream home or have lived in your dream home for many years, it may be time to improve that home. Most people do not have the funds immediately available to do this, so they will need to get a home improvement loan. These loans are meant for you to make any improvements on your home. You may need a new bathroom or kitchen, and these loans are perfect to get that done.

You will need to do research to find just the right lender for you in order to get the home improvement loan that you need. If you need a lån til oppussing or loan to renovate, you can check reviews and the Better Business Bureau to find just the right lender. 

This article will tell you all you need to know about home improvement loans for the beginner. If you have never had this type of loan, this article may help you to get started. Just remember, you will need to do more research before choosing the right lender for the job. 

Types of Home Improvement Loans

Personal Loans – This type of loan is not necessarily just for home improvement, technically you can use it for any need that you have. If you have good credit, this might be an easier loan for you to get, especially if you do not have equity built up in your home. They are fairly easy to find, as well, because just about any type of lender can do a personal loan.

A personal loan is usually done with no collateral so that you do not have to put up anything that you own to guarantee the loan. The lender will trust that you will pay the loan back or you will have it reported to the credit agencies. This makes personal loans riskier for the lender and that is why they usually charge a higher interest rate. 

When you get approved for your personal loan, you will get your money in a lump sum, which is great if you need to pay a contractor up front. It is not so good if you are a do-it-yourselfer and want the money spread out over several months. Either way, you just need to be careful in how the money is spent. 

Home Equity Loans

This is the type of loan that you can get if you have equity built up in your home. This is a secured loan that uses your home as a security. That means if you fail to pay the loan back, the lender can foreclose on your home to get their money back. This makes the interest rates lower since the lender has recourse if you fail to pay.

Home equity can be difficult to understand because not many people think about it until it is time to get a home equity loan. Home equity is basically just how much of your home that you actually own. If you owe $150,000 on your home, but your home is worth $200,000, you have $50,000 in equity. When you begin to pay of your mortgage loan, your equity gets higher. 

You can borrow up to 85% of your home equity according to the Federal Trade Commission. That means the FTC says that you can only borrow $42,500 if you have $50,000 in equity on your home. If you do not have much equity in your home, it will be much harder to get a loan. 

Home equity loans are similar to second mortgages, and they are a little bit trickier to get. You will need to contact your current mortgage lender to see what options they may have for you. You may have to go through a stricter process that includes a home inspection, and you may have to pay closing costs. When you get your money, it will all be in one lump sum.  

Home Equity Line of Credit

A home equity line of credit is like a home equity loan and a credit card at the same time. Similar to a credit card, you will be given a top limit of how much you can spend. You can use as little or as much of that limit every month, and you will be required to pay the balance, or a portion of the balance, each month. This can be handy for you if your home improvements will be stretched out over several months. You will not have to pay interest on the part of the money you have not used. 

A HELOC also uses your home as collateral, so you need to pay your bills on time or risk losing your home. Lenders usually prefer that you have 20% equity in your home before they will give you this type of loan, but they can give you up to 85% of your home’s value minus what you owe. 

Which Home Improvement Loan is Right for You?

There are a few questions that you need to ask yourself to see which loan is best for you. These questions include the following:

Do you own your home? If you do not own your home, the only possible loan that you can get is the personal loan. You will not have any equity in a home that you do not own, so home equity loans and home equity lines of credit are out of the question. 

How important is it for you to have quick cash? Personal loans usually pay you quicker than the other types of loans if that is important to you. 

How good is your credit? If you have bad credit, it will be more difficult for you to get a personal loan. Since the other two loans are secured by your home, these types are easier to get. 

Do you need your money over time or in one lump sum? If you are paying for your home improvements all at once, a personal loan or home equity loan may be better for you. If you are paying for the improvements over time, a home equity line of credit would be best for you.