Home Mortgage and Refinancing » unsecured loan

Differences Between Unsecured and Secured Home Improvement Loans

admin — Wed, 22 Jul 2009 12:38:58 +0000

There are many different ways to borrow money for a home improvement project, but essentially your options come down to a “secured” or “unsecured” financing vehicle. These two types of loans have advantages and disadvantages.

When you borrow money with an unsecured loan, you are not offering anything up for collateral. An unsecured loan is given based on your past credit rating and your current salary level. You don’t have to have any equity in order to borrow money with an unsecured loan. Most hardware store credit cards are essentially unsecured loans. Unsecured home improvement loans can almost always be used if you have very little equity in your home.

One of the most common types of unsecured loans for home improvements is a credit card. Credit cards can be offered by a home improvement store, but they can also be offered by a number of different lending institutions. Almost any credit card can be used for a small house improvement project and the loan is almost always unsecured because no collateral needs to be put up to secure the loan. Unsecured loans are usually small and can be paid off quickly.

Secure loans are loans in which the bank has some sort of collateral or item which they technically “own” until you pay it off. When you finance a car or buy a house with a mortgage the bank technically owns what you bought until you’ve paid off the debt amount plus interest. With a secured house improvement loan your house is the collateral. If you default on your loan then the bank can take your house or car and sell it in an effort to regain some of the money they lent you.

Secured home improvement loans often have more paperwork but they also usually offer a lower interest rate because they are safer for banks to give out due to the collateral involved. You may even be able to deduct the house improvement loan interest amount from your income taxes!

Both secured and unsecured home improvement loans have a purpose and can really help you fix up your home if you don’t have the cash needed readily available. Be sure to do your homework and make sure you can actually repay the loan on time.

by James Miller

About the Author:

Want to discover more about how you can pay for that home improvement? Be sure to read about other home remodeling loan options that are available.

How To Borrow Money For A Home Improvement

admin — Fri, 17 Jul 2009 12:38:59 +0000

Improving the current home you have is a great way to increase its value, make it more livable and improve your lifestyle. Improving your home is now a big business that often requires more than just pocket change and some elbow grease. Home remodeling loans are becoming more popular as interest rates on borrowed money remain low.

Today’s home improvements are becoming more costly and many times home owner must take out a loan to cover the project or borrow money from some existing asset. Using borrowed money to remodel a home is a much cheaper option than buying a new home and moving for most people.

Larger home improvement projects that require financing could including adding an addition to your home, remodeling your home to add more space, upgrading the appointments in a kitchen or bathroom, installing a new furnace or cooling system, replacing a roof or installing siding or simply putting in a new swimming pool.

There are two general types of house improvement loans. There are unsecured home improvement loans and a secured home improvement loans. Within those two types there are many different loan products which can give you extra money, though each has it’s own good points and potential drawbacks. The differences among the loan vehicles are many, but let’s focus on the two types of home improvement loans that are generally available:

Unsecured home upgrade loan: When you get an unsecured loan, it means you basically are getting the loan based on your income and credit score and you are not putting anything up for collateral. Unsecured loans are usually for smaller amounts and often have a higher rate of interest due to their increased risk. If you don’t have any equity built up in your home this may be a good option for you.

Secured home remodeling financing: A secured loan of any type is a loan which involves you offering something to the bank in exchange for the money. If you get a home improvement loan based on the equity in your home, then you are really trading part of the ownership in your house to the lending institution. As you repay the loan you are buying back your house. Secured home improvement loans usually involve larger amounts of money but do have a lower interest rate and offer a longer time to pay it off.

Each borrowing option has some positive and negative aspects and there’s no loan that’s perfect for every situation. There are credit cards, bank loans and even online lending institutions now. Some loans are better for smaller home improvement projects while some are much more useful for large home projects. Borrowing money to improve your home will generally raise the value of your home, though the value may not always exceed the amount of money you borrowed initially.

by John Miller

About the Author:

Remember that any upgrades you make to your house should be considered an investment. In some situations you may qualify for tax deductions from your home improvements if they meet the right criteria. These deductions can quickly help you repay your original loan!

What To Know About Home Upgrade Loans?

admin — Thu, 16 Jul 2009 12:43:32 +0000

Upgrading the current home you have is a great way to increase its value, make it more livable and improve your lifestyle. Improving your home is now a big business that often requires more than just pocket change and some elbow grease. Home remodeling loans are becoming more popular as interest rates on borrowed money remain low.

Many home improvement projects require some sort of financial loan because they are large scale projects that require payment on materials or labor all at once in order to get the project started. These larger home improvement projects require some sort of bank or lender issued home improvement money.

Larger house improvement projects that require financing could including adding an addition to your home, remodeling your home to add more space, upgrading the appointments in a kitchen or bathroom, installing a new furnace or cooling system, replacing a roof or installing siding or simply putting in a new swimming pool.

There are lots of different ways to pay for a large house improvement, but taking out a home upgrade loan explicitly for the purpose up upgrading your house is usually an option that’s worth looking into. Most unsecured loans can be broken into one of two categories:

Unsecured home improvement loan: An unsecured loan of any type involves you borrowing money without putting anything up for collateral. That means that if you can’t pay the loan then there is technically nothing the bank can immediately take away from you. Unsecured loans are granted based on many factors, but a steady income and good credit score definitely help. Home improvement credit cards are technically unsecured loans that are meant to be used for home improvement projects. Unsecured loans are meant to be paid back over a short period of time and will almost always have a higher interest rate.

Secured house upgrade loans: A loan that has some sort of collateral, such as existing home value, tied to it is called a secured loan. Secured loans usually have lower rates of interest and are available from many different banks.

The type of loan you choose should be based on the size of your house improvement project, your credit score, your income and the amount of equity or collateral you have readily available. Remember that there are many different types of loans to choose from. You might also want to see if you are qualified for a Title I home improvement loan from a local bank. Borrowing money to improve your home will generally raise the value of your home, though the value may not always exceed the amount of money you borrowed initially.

by James Thomas Millner

About the Author:

Before starting any large home improvement project you should consider your many different home improvement financing options and carefully pick the lending instrument that best fits your borrowing needs and financial situation.

125% Home Equity Loans Could Be the Answer

admin — Fri, 10 Oct 2008 17:49:29 +0000

With the current mortgage and housing crisis there are many people who’ve seen all the equity in their homes disappear. If you’re in this boat, but are looking for a way to get a loan to make improvements you may still have an option once the smoke clears. Once credit eases up again a 125% home equity loan could be the answer to your home improvement loan problem.

125% home equity loans are second mortgages on your home and as you can probably tell they are meant to access up 125% of a homes’ value. So, even if you have little to no equity in your home you can get a loan to do home improvement projects. With a home valued at $200,000 even if you have no equity at all you could get a $50,000 loan.

If you’re considering this type of loan you should know that the main criteria for getting approved, now even more than ever, is a high credit score. Because it is an unsecured loan lenders are only interested in borrowers who are very well qualified with very little risk of default.

You can easily find specialized lenders online who deal primarily in 125 home equity loans and other types of unsecured loans. Each one has their own rules to determine qualification. While your credit score is important to all of them, some will also look at your income, your current debt levels and how long you’ve owned your home.

In most cases a home appraisal won’t be necessary when applying for a 125% home equity loan. Typically the lenders will use the current appraisal or if you’ve only been in the home a short time they will use the sale price of the home to determine how large a loan they can offer you. It’s possible they will also look at what other similar homes in your neighborhood have sold for recently.

While you may have to wait for the current credit crisis to settle down a bit, don’t give up on getting the money you need for home improvement. A 125% home equity loan could be just what you need if you’re looking to tap the value of your home. Take the next few months to improve your credit score and you’ll be in a much stronger position to get approved once you do go for that loan.

Home Loans for Bad Credit Borrowers

admin — Thu, 09 Oct 2008 17:54:19 +0000

Have you been trying to get a home, but having troubles because your credit is less than perfect? In our troubled times you’re definitely not alone. Home loans for bad credit are becoming increasingly difficult to come by, but you’ll be glad to know that there is a solution. Because it is such a widespread problem there are companies that offer loans specifically for those with bad credit. Because of the increased demand for bad credit mortgages it seems that they are actually getting easier to obtain.

Bad Credit Is A Common Problem

Unfortunately bad credit is something that can be difficult for many people to avoid. This is simply because our lives these days are so filled with appointments and information that many are overwhelmed and it becomes difficult to keep track of our finances. And any type of slip up can immediately put your credit score in jeopardy. Anything from the serious like a bankruptcy to the simple such as a late or missed payment can have serious consequences on our credit scores and mark us as poor credit risks. And once you’ve been flagged it becomes even tighter as credit lines are shut off, interest rates increase and creditors become increasingly less tolerant. If you’re looking for a home loan any minor problem can become a major issue.

Home Loans For Bad Credit

If you are looking for home loans for bad credit borrowers you have two types you can apply for, a secured loan or an unsecured loan. A secured loan is quite simply one which has some type of asset backing the loan. This can be the home itself, a car, a business or virtually anything with measurable value. These are the most common types of loans and usually it is the house itself that secures the loan. The interest rates are lower and if you have bad credit this may be your only option as the lender needs some guarantee in case things go wrong.

Unsecured loans are just the opposite. They do not have anything of value backing them. The interest rates can be substantially higher for an unsecured loan and while these loans were becoming quite common through 2006 and 2007 they are now almost impossible to come by as foreclosures and bad debts mount across the country.

Current Options For Bad Credit Borrowers

While home loans for bad credit are difficult to get from banks and credit unions, there are an increasing number of online lenders willing to work with bad credit individuals and approve them for mortgages. Online lenders are able to do this because they are taking advantage of the niche and also because their costs are much lower than traditional offline lenders.

Online lenders have recognized the profit potential in the bad credit loan area and they have been increasingly offering loans to those with bad credit. It’s a win-win situation as the online companies are able to make a profit and the person looking for a bad credit home loan is taken care of as well. This means that they can finally get into a home of their own and it also helps them to begin the rebuilding of their credit. Seems like everyone benefits from home loans for bad credit.