If you’re a homeowner, then you probably have one area that you always wanted to improve. It could be remodeling the kitchen, bathroom or even changing the roof. However, costs for such renovations can sometimes be overwhelming to homeowners. Finding all the cash to finance such projects is not that easy. Sometimes you might consider a loan to finance such projects.
This leads to our big question. Is taking a personal loan for home improvement a good idea?
No, the first and best idea is to use cash. However, not everyone can afford the huge finances that come with home improvement project. There is nothing absolutely wrong with taking a personal loan for your home improvement. After all, our homes are the best investments in life. This is where we retire to after a long day at work.
Investing in your home either through a loan or cash is a great way to spend your money on assets that will keep growing in value. People apply for loans to finance ideas and items that don’t increase in value and yet are able to pay back. However, when your loans are used on projects to upgrade your home, you will have gained in the long-term. You will be living in a better home while still paying the loan as compared to living in a poorly made house while saving to make upgrades.
There are home improvement projects that will not wait for you to save enough money for the upgrades. Let’s, for example, say the pipe in the bathroom broke. Will you be using a hosepipe to show for months as you save? Getting a personal loan for the home renovation project is an excellent idea and you will not be making a wrong decision.
There are just so many reasons to take a personal loan as compared to home equity. Despite the higher interest rates, personal loans have a fixed interest and longer payback term.
Where can I get a personal loan?
There are several places to apply for a personal loan ranging from the bank, credit unions, federal programs and several other financial institutions. It all comes down to where you get the best rates. You can also check on a few online lenders with excellent terms and flexible repayment plans. You can read more on bestegg.com reviews which also helps finance big projects, purchases, and business expenses.
Personal loans for home improvements increase the value of your home
Since the housing crisis in 2008, the value for most homes went down drastically. There are those that owe much more than the market value for their homes. However, valuable improvements could easily put your home to value. In fact, there is nothing wrong with taking a loan to finance a project that increases in value. We’ve seen people take loans to finance a car that depreciates in value each year.
If you can apply for a loan to finance a car purchase for your travel convenience, then there is nothing wrong with applying for a loan to make your home more comfortable and relaxing while increasing its value at the same time.
So, what makes personal loans for home improvement projects a great idea?
First, personal loans are a great idea if you don’t have enough home equity. They are easy to apply and one can easily start their project in no time. If you have some saved cash and want to make a down payment, then the lender will even give you a great rate.
Personal loans usually have lower interest rates of about 2 percent less than credit cards. If you’re thinking of loading that credit card with a huge bill, then think again.
When it comes to paying your contractor, there are no fees charged when you’re financing through a personal loan. Remember you need to make sure every penny counts since you will be paying interest on the money. Credit cards will charge you a large processing fee which sometimes is 5 percent of your project. However, this is not the case when using a personal loan. You can simply write your contractor a check from the bank and avoid and fees.
Personal loans are excellent at keeping your expenditure in check. They have a fixed amount which you’re paid when the amount is approved. You will not be tempted to borrow more like when using the home equity loans.
In conclusion, it makes sense when you take a personal loan to upgrade your home as compared to taking a home equity loan.