Home Improvement Loans: What Are Your Options?

Home improvement projects almost always increase the value of a home, but it comes with an upfront cost that not every homeowner is prepared to pay. In some situations, it is a project that can provide immediate savings, especially if it is an improvement that creates efficiencies that will cut down on utility costs. Again, not all homeowners have the upfront cash on hand to complete these projects.

The problem with waiting a couple of years on that project and saving up more money is that the project often becomes more expensive the longer the homeowner waits. This is when contractors should have another option for funds available to their clients.
Financing hope improvement projects is not uncommon today, but it is becoming less common through traditional funding resources. The big banks are held to stricter standards today than they were just a few years ago, which means homeowners without perfect credit are not very likely to be offered financing. However, non-traditional financing groups are now coming to the rescue.
Many contractors have set up programs with a 90-days same as cash method. These arrangements come with a limit as to how much will be loaned out, obviously because the homeowner has only 90 days to pay it off. The home improvement loans like this will often require some money down, anywhere from 10 to 50 percent, which can help ease the pay down over the 90 days. This agreement is often offered with a six-month term.

Unsecured loans are also a popular method for home improvement loans that don’t involve putting the home up as collateral. The only issue with this method is that interest rates are generally quite a bit higher than the other choices.
Home equity loans are offered through banks, but they require the home to be put up as collateral. The interest on these loans is tax deductible, which can look very appealing to people who know how to finesse their taxes. Another pleasing aspect of the home equity loan is the competitive interest rates, but this generally only helps homeowners with outstanding credit.
Contractors that partner with a third party finance group for home improvement loans are often able to attract a wide variety of homeowners, from those with outstanding credit to those with credit that might best be described as questionable. Companies like UGA are able to offer these contractors a funding source that attracts more clients.