Your Guide to Using a Home Loan To Make Home Improvements
Home loans are large loans people use to purchase a property. Potential homeowners apply for a mortgage to secure the funds needed to buy or build a house.
You can also use home loans to finance repairs and renovations. Home improvements can increase your property’s value and help protect your home from natural disasters. Learn how to use a home loan to finance upgrades and major renovations to ensure you make sound financial decisions to pay for your home renovation projects.
Use a home loan comparison tool when searching for a home loan to identify all your loan options. Indicate whether you want to refinance your mortgage or qualify for a new loan. The tool prompts you to add additional information, such as your target price, the amount of money you have for your down payment, and whether you qualify for grants that can be used to help you purchase a house. Once you’ve entered all the requested information, the tool generates a list of home loans. It lists pertinent information, such as the loan’s interest rate and whether it’s a fixed-rate or adjustable-rate mortgage. It also estimates your monthly payments for each loan.
One reason to use a home loan to pay for household updates is to save money. Credit cards have higher interest rates than mortgages, so using a mortgage to finance your projects can save you money.
In the United States, homeowners who qualify for a VA loan or a Federal Housing Administration (FHA) loan can use their loan to pay for updates. VA and FHA loans have restrictions. You may be able to replace a damaged garage door or upgrade your plumbing, you won’t be able to use the loan to pay for an inground pool. You can also apply for a home equity line of credit (HELOC) loan to finance improvements. No restrictions govern the type of home improvements you can use HELOC loans to finance.
Most homeowners face potential risks from natural disasters, such as hurricanes, tornadoes, earthquakes, and wildfires. While homeowner’s insurance may cover the cost of repairs after your dwelling incurs damage, appropriate upgrades can prevent damage.
There are specific home upgrades you should make if you live in hurricane country. Hurricane clips can keep high winds and heavy rain from damaging your roof. It’s also a good idea to install a generator to prevent food from spoiling and ensure you can keep your phone charged during the storm. You can also protect your home by installing impact windows designed to withstand high winds.
If tornadoes are common in your area, you may want to construct a tornado shelter to protect your family. People affected by blizzards or wind storms may also want to install a generator to ensure they can preserve food and cook meals if their power goes out.
FHA and VA loans can be used to replace outdated systems, such as your plumbing, electrical, and HVAC unit. Damaged or clogged pipes can cause sewage to back up in your home. This can damage your property and cause health issues. Replacing or repairing pipes can prevent serious plumbing issues.
Outdated electrical systems also pose a safety risk. Old or damaged wires can cause house fires. Investing in electrical upgrades will ensure you aren’t tripping breakers regularly and may also reduce the cost of your homeowner’s insurance policy.
Insurance premiums also decrease if you replace your roof. Leaky roofs allow moisture to enter your home. This can cause mold growth and property damage from rotting support beams, floors, walls, and ceilings. Replacing an old or damaged roof will keep precipitation out of your home and protect your house and property from water damage.
Your insurance company might cover the cost of repairs if your home was damaged in a storm. You may want to evaluate the deductible fees you’ll have to pay and how your claim will affect your insurance premiums to determine if this is the best option for financing repairs. You can also opt to use funds from a loan to pay for repairs.
Home loans can be used to pay for household maintenance, updates, and improvements. The types of improvements you can finance with a loan will depend on the terms of the loan. You may be able to invest in upgrades to protect your home from natural disasters and repair property damage. You could also opt to obtain a home equity loan without restrictions on the types of improvements you can finance.