Making improvements to your home can make it more comfortable to live in as well as increase its market value. However, you will need to find a way to pay for those improvements. Let’s take a look at the lending options available to those who are looking to start a home improvement project.
Home Equity Loans Can Offer Affordable Loan Terms
If you have sufficient equity in your home, you may be able to use it to upgrade your home. Home equity loans are generally repaid over the course of a decade, and they have interest rates that are similar to first mortgages. Therefore, you may be able to get an interest rate of 5 percent or less without the need to put up collateral other than the home itself. Depending on how much equity you have, it may be possible to borrow up to $50,000 or more.
Borrow From Your 401k
Those who have money inside of a 401k may be able to borrow up to $50,000 with no credit check or questions asked. The only requirement is that the plan administrator allows you to take out a loan. Most loans are repaid over the course of five years with payments made once a quarter. If you fail to make a payment, you could be hit with early withdrawal penalties as well as income taxes on the money that isn’t repaid.
Peer Lending Can Help You Get the Money That You Need
Peer lenders are individuals who are looking to make money loaning their cash to others. Interest rates are similar to those that you would get from a bank for a personal loan. Loans can be repaid over the course of one, three or five years depending on the amount that you borrow and how much you can afford to pay each month.
Ask Your Friends or Family Members for a Loan
Friends and family members may be willing to lend you money to help upgrade your home. Your parents may be willing to help you add another bedroom if it means that their grandchild has a more comfortable childhood. Your friend may be willing to help you add that finished basement to your house if it means having a place to sleep on a Saturday night. It may also be possible to convince your friends, family or other contacts to loan you money by offering competitive interest rates and a timely repayment schedule.
Your Employer May Give You An Advance
A salary advance may be the best way to get the money that you need to improve your home. In most cases, you are borrowing against your future salary, so you aren’t taking out a loan in the traditional sense. Therefore, you may not be required to pay interest or otherwise pay for the right to borrow that money. As long as you can afford to pay your bills until your next scheduled paycheck, it may be a viable option to pursue.
Short-Term Lending May Be an Option
The use of auto title loans could help you get thousands of dollars in less than 24 hours. Those who don’t own their own car may want to turn to payday lenders or opt for either a secured or unsecured personal loan from a local or online bank.
Adding a new bedroom, a garage or a finished basement to your home can add living space or make it easier to secure your car at night. Waterproofing the basement can keep pests at bay while improving the air quality in the house. While making these improvements may require a large initial investment, it will be worth it in the long run. Therefore, it is in your best interest to make them even if you have to borrow money to cover the cost of doing so.