Knowing Your Home Improvement Loan Options

Home improvement loans can give you the ability to do a lot of different things. When you own a house, there are many different types of repairs you may want to make like install a new roof, new flooring, extra room or a number of other things. As long as you own the house, you will most likely want to fix certain things about it. This is when home improvement loans can come in very handy. When you are looking to take out a home improvement loan, you have a number of options. Here are a few of the more popular home improvement loans that are available. 

Refinance

When you have been paying on your home for a number of years, there is a good chance that you have some equity built up. In order to take advantage of this equity, one great tool is a refinance loan. With a refinance, you can get cash out and basically start your loan over again. When you take out this type of loan, you are taking advantage of tax law as you can deduct the interest on your income taxes. This is a huge benefit that can offset some of the costs of the loan. When you start out with a new mortgage, the majority of your monthly payment will be interest every month. This can amount to a huge deduction for you at the end of the year. 

Home Equity Loan

A home equity loan is another way that you can use to get the money you need for home improvements. Home equity loans are also sometimes called a second mortgage. This type of loan allows you to borrow against only the equity of your home. It does not require you to take out a loan for the entire amount of the house like a refinance would. These loans also have shorter terms than traditional mortgages. A common term for a home equity loan is 10 years. With a home equity loan, you also get the tax advantages that come with a regular mortgage as well. You can deduct the amount of interest from your home equity loan on your tax return.

Home Equity Line of Credit

A home equity line of credit or a HELOC is very similar to a home equity loan. With a home equity line of credit, the main difference is that you do not have to borrow a set amount. You are given a credit line and you can borrow the money as you see fit. If you need $1000 at the beginning, you can take it. If you want to wait a year and then borrow $5000, you are free to do so. 

Store Financing

When you are improving your home, many of the stores you shop at have in-store financing. These financing plans may offer you zero percent interest for a specified period of time. These loans are based on your credit and income and can save you some money on interest if you use them correctly.

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