Are you considering doing some renovations? Do you have a bill from a contractor that you didn’t plan on? Either of these scenarios may not be the case today, but they are questions that every homeowner should consider, and probably will consider at some point in time. Whether you need to replace your plumbing system or are considering a DIY renovation, a home improvement loan may be something to consider.
Here at TVFCU, we help find pathways of success for our members to be able to take care of what they need to take care of, and feel confident in the financing process.
Today, we wanted to help break down 4 different types of Home Improvement Loans so you can have a better idea of what may or may not be best for you! This blog is meant for educational purposes, but we recommend you make an appointment with us to go over your personal best options for what you need!
We offer 1st and 2nd mortgages, and we have a home improvement loan product that can allow you to borrow up to $150,000 on your primary residence or up to $100,000 on your rental property. We also offer personal loans that can provide a bit of breathing room in a pinch.
So, what are a few reasons someone might consider a home improvement loan?
Well, these usually break down into one of two situations: you either WANT to make a change, or you NEED to make a change.
Here are a few examples of each:
Want:
- Buying new furniture
- Upgrading the kitchen
- Upgrading the bathroom
- Building a new garage
- Installing a home addition
Need
- Fixing an issue with your sewer line
- Replacing electric
- Replacing/repairing plumbing
- Replacing HVAC
- Installing a new roof
Owning a home is both rewarding and challenging, but luckily, there are options available to help pay for these types of things, regardless of whether they are by choice or necessity.
Here are a few types of Home Improvement loans out there that you may have heard of:
Home Equity Loan
A home equity loan allows you to convert a portion of the value of your existing home into cash without affecting your existing mortgage. You will have two payments, and the rate is higher on a second mortgage. It is a fixed-rate, lump-sum loan that will create a second monthly payment.
Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit is slightly similar to a Home Equity Loan in that it turns your home equity into cash. However, rather than turning that cash into a lump sum payment, it could be considered functionally more like a credit card. You can draw funds and put them back in for reuse, but you only pay interest on what you draw. During repayment, the balance freezes, and you pay back principal and interest.
Cash Out Refinance
Different than a HELOC or Home Equity Loan, a cash-out refinance takes a higher loan balance on your existing mortgage. This can and will offer you a lower interest rate than you would on a second mortgage, and offer only one payment. It does change the terms of your original mortgage. In some cases, a home equity loan or line of credit could be more beneficial to access more equity, but we recommend you make an appointment to speak with someone here at TVFCU to go over your options.
Personal Loans
There are options to take out a personal loan, which may be a better option for you if you don’t need a huge lump sum. A personal loan is based more on your credit history and doesn’t have collateral associated with it. (doesn’t use your home as collateral) There is a bit more flexibility involved in the personal loan application process, and you can use it for anything, including home improvement. This may be a good option for someone in need of a quick repair or fix.
As we mentioned, these are just a few types of typical examples that someone might consider for a home improvement loan. If you’re facing a challenge or considering a creative update to your home, we recommend you get in touch with us to schedule a time that we can sit down and go over what you need financing for, and we’ll provide you with the best option we have to offer!
Whether you need a 1st or second mortgage, need a home improvement loan, or just need a personal loan to help cover a repair, we can help! Stop by our branch in Batavia, fill out the form on our mortgage page, or give us a call at (800) 722-8224 to get in touch with us and start the process!
