Home improvement loan or personal loan
Personal Loan or Home Improvement Loan? This is the question.
We love to decorate our houses.
And there are phases in our lives when we may have spent too much time watching Food Food or TLC and thus built castles in the air out of visions of turning our kitchen into a chef’s paradise. Or maybe our master bathroom is just one shower away from disaster. Because we really love Italian tiles in our bathrooms.
And if so, then cheers, you’re not alone. Harvard University’s Joint Center for Housing Research recently studied and reported that the home improvement industry should continue to see record spending in 2016. For many people, that means borrowing money to pay for well-planned home improvements and schemes for decorating the home.
Now one has to face a difficult and difficult and perhaps hypothetical question.
So, which home improvement loan is right for you?
Many homeowners and homeowners are looking to use the equity in their homes. But home equity loans or home equity lines of credit may not be possible or very practical for some borrowers. In this case, you should consider using a personal loan.
Although it is known that a person can use a personal loan for various reasons, there are several reasons why a personal loan can have advantages over home equity loans when it comes to a renovation loan, specifically.
The process of applying for a personal loan is usually quite simple and fairly straightforward. Your own financial situation – for example, your credit history and ability to earn; this is often the main deciding factor as to whether or not you will be able to get a loan, for how much, and if so, at what interest rate. Some personal loans even boast that they have no origination fees.
However, home equity loans or home improvement loans, on the other hand, are similar to applying for a mortgage (in fact, home equity loans are sometimes called second mortgages). How much you can borrow depends on several factors, including the value of your home. Because you can only borrow against the equity you already have (ie the difference between the value of your home and your mortgage), you may need to arrange for – and pay for – a home appraisal.
Let us now see this case in case of home improvement loan. With a home equity loan or home improvement loan, you can only borrow against the equity you have—which, as a new owner, probably isn’t much. Maybe you haven’t had enough time to pay off your mortgage and the market hasn’t yet appreciated the value of your home. A personal loan allows you to start home improvements regardless of how much equity you have. So, this is one advantage of using a home improvement loan.
With a home equity loan, you use your home as collateral, which means that failure to pay can result in your home being foreclosed on. While defaulting on your personal loan comes with its own risks (like ruining your credit and credit score), it’s not directly related to the roof over your head, like a gun to your head. Hence, it is better and safer to avail a personal loan.
So if we have to decide, which is better, safer and more suitable?
Personal loans may not be right for every borrower looking for a home improvement loan. For example, if you have significant equity in your home and want to borrow a large amount, you may be able to save money with lower home loan interest rates. In addition, interest payments on loans and lines of credit may be tax deductible under certain circumstances; but this is clearly not the case with personal loans.
On the other hand, personal loans can make sense for these types of customers:-
• Recent home buyers.
• Smaller home improvement loans (eg, bathroom or kitchen, as opposed to a full remodel)
• Borrowers in markets with lower home values (if your home’s value has barely changed since you moved, you may not have much equity to draw on for a home equity loan).
• For those who value ease and speed.
• Borrowers with great credit and cash flow.
While home equity loans and lines of credit are a good source of money for home improvements if you’ve already built up equity in your home, a personal loan may be a better alternative if you’re, say, a new homeowner and need to take care of a few updates to make your new home just right and perfect.
In conclusion, we conclude that a personal loan is a better option than a home improvement loan at any time.
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