If you are a long-time or even a first time homeowner you know all too well the importance of a properly maintained home. Whether it is for repairs, a new addition or just something to spruce up your home, you may need to get a home improvement loan to tackle your project.
With the recent boom in the housing sector, lenders have devoted a large portion of their resources to offering many types of loans for this purpose.
One of the most popular types of home improvement loan is the home equity loan. Although, many first time homeowners may not qualify for a home equity loan, recent appreciation of home values, may suggest otherwise.
What exactly is a Home Equity Loan?
In simple terms, a home improvement loan that allows a homeowner to borrow against the equity of his home is considered a home equity loan. This type of loan allows you to borrow against the built up value of your home, which is the difference of what your home could be sold for, versus the amount you still owe.
For the purposes of a home improvement loan, this equity type of loan is one of the most popular and home owners have used this type of loans for home improvement projects, buying a new car and even financing a child’s education.
The major reasons for its popularity is two fold: 1) this loan usually has the lowest interest rate available and 2) the interest you pay maybe tax deductible (although you should always check with your tax advisor).
In recent years, these types of loans are very easy to establish. Many lenders do not even require you to pay for an appraisal, and some even mail out pre-qualified applications, with credit lines already established.
Many of these home improvement loans, work like a revolving credit line, where your balance and credit line act similar to a charge account. It would be prudent to compare the fees and costs of establishing a home equity loan among the various lenders and choose the best one for your situation.
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