Home improvement loan or personal loan
Personal loan or home improvement loan? That is the question.
We love decorating our houses.
And there are phases in our lives where perhaps we have spent too much time watching Food Food or TLC and thus have built castles in the air of visions of turning our kitchen into a chef’s paradise. Or maybe our master bathroom is just a shower from a mess. Because we really love Italian tiles in our bathrooms.
And if so, cheers, you are not alone. Recently, the Joint Center for Housing Studies at Harvard University has investigated and reported that the home improvement industry should continue to record record spending in 2016. For many people, this means borrowing money to pay for improvements and renovations. well-planned home decoration schemes. .
Now, one must face a difficult, difficult and perhaps hypothetical question.
So which home improvement loan is right for you?
Many homeowners and homemakers seek to take advantage of equity in their homes. However, home equity loans or home equity lines of credit may not be possible or not very practical for some borrowers. In that case, one should consider using a personal loan.
While it is known that a personal loan can be used for a variety of reasons, there are a few reasons that a personal loan can have advantages over a home equity loan when it comes to a renewal loan, to be specific.
The process of applying for a personal loan is usually quite simple and straightforward. Your own financial situation, for example, your credit history and purchasing power; This is often the biggest deciding factor in whether or not you’ll be able to get a loan, for how much, and if so, at what interest rate. Some personal loans even boast of 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). The amount you can borrow depends on several factors, including the value of your home. Because you can only borrow against the equity you already have (that is, the difference between the value of your home and your mortgage), you may need to arrange and pay for a home appraisal.
Let’s now look at this case in the case of a 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 homeowner, is probably not much. You may not have had enough time to lower your mortgage, and the market has not yet raised the price of your home. A personal loan allows you to start making home improvements regardless of how much equity you have. So that’s one of the benefits of availing a home improvement loan.
With a home equity loan, you use your home as collateral, which means that failure to pay could result in foreclosure. While defaulting on your personal loan comes with its own risks (like ruining your credit and credit score), it’s not tied directly to the ceiling above your head, like a gun to your head. Therefore, it is better and safer to make use of a personal loan.
So if we had to decide, which one is better, safer and more suitable?
Personal loans may not be suitable for all borrowers seeking a home improvement loan. For example, if you have significant equity in your home and are looking to borrow a large amount, you could save money with lower interest rates on a home equity loan. Additionally, interest payments on home equity loans and lines of credit may be tax deductible in certain circumstances; But that is clearly not the case with personal loans.
On the other hand, personal loans can make sense for these types of clients: –
• Recent home buyers.
• Smaller home improvement loans (for example, bathroom or kitchen instead of full remodel)
• Borrowers in lower home equity markets (if your home’s value has barely moved since you moved, you may not have much equity to get 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 have already built up equity in your home, a personal loan may be a better alternative if, for example, you are a new homeowner. and you need to take care of some updates to make your new home perfect and perfect.
To conclude, we conclude that a personal loan is a better option than a home improvement loan, at any time.