Buying a new home doesn’t mean that you are going to have a property that is in perfect condition or is exactly how you want it. While it might be free of debris, have clean gutters, and have a yard that has been taken care of regularly, you, as a homeowner, may want to make larger changes to your home in the long run that will provide you with the living experience that you are looking for.
That said, home improvements are expensive, and not everyone has the finances needed to pay for these out of pocket. The solution? Taking a new loan out for your needs can help you pay for these renovations. If you are looking for a loan for this use, let’s walk through which type of home loans are best suited for your home improvement needs.
1. Figure Out Your Budget and What You Can Do on Your Own
Before you apply for an additional loan that further increases the total amount you will have to pay back during the life of your loan, take some time to consider how you can boost the value of your home without having to pay back interest payments in the process. This begins with figuring out what your current budget looks like and how you may be able to use it to handle some of the renovations or improvements needed on your property. It will also give you the financial peace of mind you need so you aren’t spending more than you can afford.
Once you have a better idea of what your budget looks like, consider areas of maintenance such as:
- Regular gardening and outside maintenance, which may be essential if you have a lot of lands known for gathering debris
- Semi-regular maintenance projects such as cleaning windows, gutter cleaning, and maintaining other outside parts of your home. While some of these projects, like cleaning the windows of the first story or clearing your gutter system on a small house may be easy, others may require you to enlist the help of a gutter cleaning service who can take care of this work for you. You can use part of your budget to hire professional gutter cleaning experts or other services to take care of these projects for you if needed.
- Small home improvement projects that are one-and-done and would be easier or more affordable to handle on your own.
Anything that doesn’t fall within these categories, such as room additions or other large projects, may warrant looking for a loan. But what exactly is the right loan for home improvement projects?
2. Find a Loan That Works With Your Income and Needs
Now that you know exactly what you can take care of and what your current budget is, it’s time to set out for a loan that you can use to get the job done. While this may sound simple, this is often the hardest part. What should you be looking for?
- The Overall Loan Amount and Interest Rate: As a borrower, the most important things to know are how much you will be needing and how much you are going to be paying back, which often relies on the type of loan you choose and the initial rate as well as whether or not the rate increases over time. For example, some small personal loans, while great for small projects, may come with high-interest rates, minimum amounts that need to be borrowed, and collateral requirements. Of course, if you have a larger project and you have yet to buy the house you are looking at, you can set your sights on a mortgage loan that allows you to lock in your repayments with a fixed rate loan so that you don’t have to deal with varying monthly payments or higher interest rates. Pay close attention to the loan terms to see how you will be affected by your choice of loan.
- The Loan Repayment Period: You will notice that the time you have to pay back a loan will differ based on your loan type and greatly impact your interest rates. If you are getting a mortgage loan, for example, you may be able to keep payments down with a fixed-rate loan that requires you to pay a set amount over a set period. If you are taking a personal loan out, however, you may end up paying a higher rate throughout the life of the loan (which is often relatively short). Make sure to go over your loan terms to avoid this!
- Additional Fees: If you’re not careful when selecting a loan, you can easily wind up paying for a large number of fees, even if your choice comes with less interest than other options. Whether this is an annual fee, fees that are specific to the lender, or sign-up fees that are tagged onto your bill when you first receive your loan, you should be aiming to pay as few fees as possible.
Although the process of looking for a home loan with the right interest rate that will help you achieve your home improvement goals can sound difficult, it all boils down to learning more about your needs and finding out which solution will be the best for your given financial situation.
If you can, try to look for a fixed-rate loan for your home that will help you accomplish your renovations without altering your automatic payments. If you already have your home, you may want to look into personal loans that can give you access to the funds that you need. Use the guide above to learn more about what to look for in a home loan and which options may be best for you.