Is your home in need of an update? Whether you’re hoping to update a room for cosmetic purposes, or your home is in need of expensive repairs, the cost can be more than you have laying around. If that’s the case, you’ll be happy to know that you can get a remodel loan to cover the expenses.
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What Is a Remodel Loan?
A remodel loan, also called a home improvement loan, is an unsecured personal loan that can be used to invest in upgrades or repairs on your home. The maximum loan amount is $100,000, which typically gets paid out in a single lump sum. Going this route could be a good option for you.
Let’s look at some of the pros and cons of a remodel loan:
Fixed payments – The repayment period can be up to 12 years, making budgeting easy.
Fast funding – application only takes a few minutes, and funding can be paid out in a couple of days.
High interest rates – unsecured lines of credit come with high interest rates, which will raise your monthly payment.
No tax benefits – you cannot claim the interest from a remodel loan as a tax deduction.
Other Options For Financing Home Remodel Projects
If you have equity in your home, you may want to consider using it to cover your home improvement needs. Equity is the difference between the value of your home and how much you owe on it. For example, if your home is worth $650,000 and you owe $350,000, you have $300,000 of equity. You can borrow some of that equity through a home equity line of credit (HELOC) or a cash-out refinance. Either of these choices will have a lower interest rate than a remodel loan.