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What Kind of Loans Can I Use for Home Improvement Projects?

Every homeowner in Bucks County has a list of home improvement projects that they would like to have done. Whether it’s redesigning your kitchen, siding installation, roof repair, or redesigning your basement, the price tag for all of these projects can quickly start to add up. Most homeowners have to prioritize which projects get top billing and let some of their dream projects fall by the wayside. There are plenty of financing options available to help homeowners pay for more of their dream renovation projects, but knowing which option works best for your situation may require a bit more research. 

Cash-Out Refinance Loan 

Refinancing your mortgage often helps make your payments more manageable while ideally lowering the interest rate. However, with a cash-out refinance loan, you can also gain more money for your future renovation projects. This type of loan combines adjusting your loan term to potentially pay it off sooner with giving you funds to handle the home renovation projects you want to do. The newer loan will have a larger balance than what you currently owe; using your home equity will help pay off the balance remaining on the old mortgage, and you get to keep the difference between the two. You can use this money to help fund future home renovation projects that you would otherwise have to push to the side. 

Home Equity Loan

Home equity loans take the equity your home has accrued over time and borrow against that. The lender calculates the equity value by taking your home’s value and subtracting the outstanding balance you owe on your mortgage loan. Home equity loans are perfect for large one-off projects, especially when you have built up significant equity in your home. 

Home Equity Line of Credit

Unlike a HEL, the home equity line of credit takes your income, credit score, and home value to determine what your spending limit looks like. These types of loans also come with fixed-term limits that usually fall between five and twenty years, and the lender can adjust the terms of the deal in response to the performance of your credit score, home equity, and the like. The flexibility this kind of loan offers works best for smaller projects you may want to do over time. 

Unsecured Personal Loans

If your home does not have positive equity, you may think you do not have any options besides paying out of pocket for your renovation projects. However, that is not necessarily the case, as you can take out personal loans to help cover the cost of your planned renovations. Since these are unsecured loans, your home won’t be used as collateral. The time frame to pay these loans back is often shorter — between two and five years — but they can often be more accessible for homeowners that do not have as much equity in their home built up over time. These loans are best used for emergency home repairs in the vein of your HVAC system or water heater. 

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If you are in the market for home repairs but don’t know how to pay for them all, the financing department at KPI Jr. Exteriors, LLC can help! We help secure financing options to ensure your Bucks County home looks the absolute best it can while getting you the best terms possible on your home improvement loans! Contact us today to get your free quote!