Home renovations: A guide to understanding home improement loans

by Carolyn Kay 03/10/2024

person holding a power tool

Home improvements and renovations can be costly. Securing a home improvement loan is a great way to obtain financing for your home improvement project.

There are many home improvement financing options available on the market. The typical rate of these loans land around 3 percent to 36 percent. Comparing the interest rates and other factors of these loans can help you determine the best option for your home.

Defining a home improvement loans

Some home improvement loans are unsecured personal loans. These funds are allotted to help pay for the cost of home improvement projects. These projects can liven the space and even increase curb appeal.

You don’t have to offer collateral to secure financing. These loans are based on personal information such as income and credit score.

Home equity loans use your home to secure the financing. Typically, the interest rate is lower on these loans in comparison to an unsecured loan. Home improvement loans can be secured through your personal bank, online lenders and credit unions

How does a home improvement loan work?

Home improvement loans can be used for many home renovation projects. They can be used to update your kitchen or repair damage after a severe storm. These funds are granted specifically for home remodeling and improvements.

Comparing home improvement loans

With so many choices of loans on the market, how do you choose? Some of the best home improvement loans have low APR rates and don’t penalize for a late monthly payment. Calculating how much your home renovation costs will help pick the right loan. Some lenders have a max cap on their loan options.

Acquiring home improvement financing

Once you have compared loan options and have found one of interest, there are some additional steps to take. See if you pre-qualify for the loan. A simple form is usually provided that asks for your personal information. This can include your credit score. An excellent credit score is more likely to result in a better interest rate and increased loan amount.

If the credit score is lower, having a co-signer can help you to secure the loan. A co-signer can also help to secure an agreeable interest rate. Once you have qualified for the loan, gather all required paperwork. This may include proof of address, pay information and more.

Acquiring financing for home improvements can ensure you have the resources needed to make your project happen. Home renovation can boost the appeal of your space. If you would like to learn more about these loans, compare local options for the best option for your household.

Home Renovations

Home Impovements

About the Author

Carolyn Kay

As a Real Estate professional, I specialize in helping my clients buy, rent or sell properties in Westchester County. I am passionate, dedicated and committed to my clients and my first priority is to provide them with first class service and guidance throughout the entire process. It has been said that I go above and beyond for my clients to get the deal closed! I have experience working with clients who have financed their purchases with either a conventional, VA or FHA loan and have a good understanding of how they work; no sale is too big or too small for me to take on. My family and I relocated to England for 2 ½ years, this was a wonderful experience but at the same time, it was overwhelming. I have first hand knowledge of the challenges as well as the positives in discovering a new community. I was born and raised in Scarsdale and once married, my husband and I decided to raise our two daughters here. Both of our daughters successfully graduated from the Scarsdale schools and are both married, living and working in Manhattan. After living in the same house for 30 years my husband and I took the leap, sold our home and bought and renovated a condo townhouse in another town. Once again we are discovering a new community and fully understand the highs and lows of selling a home we loved and buying and making a new home. I feel that my personal real estate experiences have made me more in tune with my client’s needs and therefore better able to help them navigate through the complex process. Please call me so that I can put my knowledge and experience to work for you.