Home repair loans help homeowners maintain their homes.
Home property can give one a sense of stability, pride and accomplishment. These feelings, however, are often tested with time as homes can become run down without proper routine care and occasional renovation. After much research, homeowners can come away with great, even grandiose, ideas for improving their homes that once seemed like impossibilities before obtaining adequate financing.
There are four types of home improvement loans: first mortgage loans; second mortgages, more commonly referred to as home equity loans or home equity lines of credit; mortgage refinancing; and personal loans.
First Mortgage Loans
Lenders will typically approve a loan against a first mortgage if you are increasing the value of a property. This kind of home improvement loan usually results in the loan being extended for the remaining period of the original mortgage. Payments on these loans are usually made in proportion to the work that is being carried out, and the contractor may be paid directly from the lender. In other situations, the borrower may receive the money or the loan only upon proving that payments were made to the contractor.
Second Mortgages
Second mortgages are granted based on equity in a home. That is why these kinds of home improvement loans are generally referred to as home equity loans or home equity lines of credit (HELOCs). A home equity loan is funded all at once and paid back through fully amortized, fixed monthly payments, often mimicking payments on a first mortgage. A HELOC, however, differs in that it offers flexibility in terms of a repayment schedule.
Refinancing
Mortgage refinancing not only offers the prospect of lower monthly payments and deferred payments, but for many people it frees up enough cash for use for home improvements.
Personal Loans
A personal loan for home improvement is an option for people who don't have a lot of equity in their homes to borrow against. A borrower can request this type of loan from a local bank.
Tags: home equity, home improvement, their homes, equity lines, equity lines credit
