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It’s no secret that renovating or repairing a home can be incredibly expensive. However, home renovations are also oftentimes necessary, especially when the renovations in question have to do with repairing the structure of a home or making a certain room (such as the kitchen or master bedroom) more functional.
Since the average American family cannot pay for an expensive home renovation project out of pocket, the next best option is to secure a home improvement loan. But if you’ve never had to apply for a home improvement loan before, you might be wondering how you do so.
Here are the five steps you need to follow to secure home improvement loans:
1. How Much Is Your Renovation Project Going To Cost?
Before you can secure a home improvement loan, you need to know the total cost of the project so you have an idea of the size of loan you’re going to need.
The best way to figure out the total cost of your renovation is to get estimates from several to contractors, and then to add ten percent to their estimate for an unexpected expenses that may pop up.
2. Learn About Your Credit History
When trying to secure a loan from lenders, one of the first things they will ask from you is your credit history. In the United States, you will be able to receive one free credit report a year, or you can also pay for them from any of the major bureaus. The better your credit score is, the higher of a loan you will be able to receive.
3. Gather Any and All Documents You Need
To apply for a home improvement loan, you will also need to gather several necessary documents, such as proof of your income and employment, and any tax documents as well. You may also need to receive a document from your contractor that shows the estimate for the cost of the renovation, and show this to the lender as well.
4. Get Pre-Approved For A Loan
Once you get pre-qualified, you will now need to get pre-approved for a loan. This means that you will now formally apply for the loan after you provide your credit history and all the necessary documents.
Today, you can easily apply for a home improvement loan online, though some lenders will require you to apply in person. Between these two options, applying in person is much quicker because you can hand over the documents directly for them to overview.
5. Go Over The Details Of The Loan
Once you receive approval for the loan, don’t forget to go over all of the details of it. Specifically, look for the interest rate and each of the terms in the fine print. Do not sign the loan document unless if you are completely fine with the terms.
Securing A Home Improvement Loan
Home improvement loans are often necessary for covering the cost of renovating your home, and if this is the case for you, these are the five steps you will need to follow to get the best loan for you.