Invest in Your Home
Credit and Loans
A remodel is a major purchase, comparable in cost to buying a new, or a slightly used car. If you're like most of us, you have to take a loan out to buy a car, so why would it be any different for a remodel? Interest rates are low, so it's a good time to get your remodel started. You'll get to enjoy your home more, and anything you do now can increase the value of your home in the future for when you decide to sell. One thing you'll need to do is think about how long you are going to be living in your home before moving, and then you'll have to consider how much you're willing to invest in your home. The bottom line is that you need to have your budget cap firmly in mind before you set pen to paper and start drawing up your dream project.
Know your credit situation.
Since you're probably human like the rest of us, and don't have big stacks of money laying around, then you'll need to apply for a home improvement loan. There are a few different kinds of loans to look into. There are lots of ways to go about securing a home loan. You could always talk to the bank that has your mortgage about a refinance, and there are many independent lenders who deal with home improvement loans. Most lenders are willing to offer you cash based on your credit, however some loans, like a 203(k), require information about the proposed project up front, such as a scope of work and a quote from a licensed contractor. All lenders will require details about your credit history, and it always helps to check up on all your credit info before heading out. Firstly, it's good to have an idea of whether or not you have good credit before you spend time looking for a loan. Secondly, you can see if there's any incorrect information on your credit history and get it taken care of. Debt collectors can make mistakes just like the rest of us, and it's usually a simple process to file an appeal. Perhaps you fell behind on a payment, but you ended up paying it off. If they didn't report it as resolved, that could be a 50 point hit to your credit report! Make sure you're informed before applying for a loan, as it can save you hundreds if not thousands in interest.
Some basic information on credit scores.
If you have a score of over 620, and a steady income, there's a reasonable chance of securing a loan. For the best rates, you're wanting to have a credit score of over 720.
Helpful Links:
www.creditkarma.com (free estimated credit score)
www.annualcreditreport.com (free report from three bureaus, no scores.)
Contact lenders.
Many banks offer home equity loans, using the equity in your home as collateral for the loan. You should always compare rates and find the lender that is right for you. If you have the knowledge of your credit situation, it can only help you negotiate a better rate and line of credit. Once you are approved for a loan, you can begin the process of looking for a contractor.
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