HOME RENOVATION FINANCING
IN MINNESOTA
Need Work Done On Your House? Financing A Home That Needs Renovation?
NorthPort’s Got You Covered!
What Is A Home Improvement Loan?
Things break - that’s an inevitability. Even if you take the greatest care of your household, eventually a remodel will be in order.
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A home improvement loan helps you improve your quality of life immediately.
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A home improvement loan can help you:
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Add value to your property
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Increase the comfort and living standard
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Turn your house into a home
The Three Types Of Home Improvement Loans:
There is no legal or official definition of a home improvement loan. It’s just a loan you take to finance your home repairs.
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Here are three most common ways you can get your home renovation financed.
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Personal loan
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Home equity loan
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Home equity line of credit (HELOC)
Personal Loans For Home Improvement
A personal loan is the most common way to find money to improve your household. The ‘personal’ part means that it’s not tied to any collateral - if you fail to keep up with your payments you won’t lose your house.
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Seeing as though it’s an unsecured loan, personal loans usually carry higher interest. Contact us to find out what we can do for you!
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Personal loan benefits:
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You pay in fixed monthly increments
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You don’t have to use home equity
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The loans can be finalized much quicker
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Personal loan drawbacks
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Higher interest rates
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You may have a hard time approving them
HOME EQUITY LOANS FOR HOME IMPROVEMENT
If you have equity in your house, you can put it up as collateral for a loan. This makes it much more likely that you will be approved, although the approval process may be more complicated.
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Seeing as though equity can be defined as ‘the part of your mortgage that you’ve paid off’, taking out a home equity loan is like taking up a second mortgage. This makes the underwriting more difficult, and closing costs may occur.
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It also means the amount you will be able to loan depends on the amount of equity you have on your property.
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Home equity loan benefits:
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A secured loan means a lower interest rate
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You pay in fixed monthly increments
Home equity loan drawbacks:
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You must have equity in your home
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You will probably incur closing costs
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You may have to allow for an inspection of your home
Home Equity Line Of Credit (HELOC) For Home Improvement
Taking out a home equity line of credit is sort of like taking out a home equity loan and applying for a new credit card at the same time.
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When approved for a HELOC, you get access to a limited amount of funds that you can withdraw as you please, and pay back with interest. Just like a credit card.
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It may be the best way to borrow money for a home renovation. Home improvement jobs usually take time, and HELOCs allow you to borrow money at your own pace and not in one large lump.
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HELOCs are secured by equity in your property, so the interest rates are usually lower than for personal loans.
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The underwriting process is more difficult, however, and you may need to allow for a home inspection. You will also suffer closing costs and the payments may change as you take out more money.
HELOC benefits:
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Lower interest rates
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Borrow money over time as you need it, not in one lump sum
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HELOC drawbacks:
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Installments may change
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You have to have home equity
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Closing costs and a harder underwriting process