How do you get a home improvement loan?

Get a home improvement loan by deciding the type of loan you want, shopping for the best terms and securing approval. Before applying for the loan, consider the pitfalls if you are planning to sell the home within a short time or plan to refinance in the future.

1. Determine the best type of loan for your needs

   The two most popular types of home improvement loans include those that are based on equity you have built in the home and those requiring a down payment. Each has its own benefits and disadvantages. Consider which best meets your current and future needs.

2. Shop for the best terms

   You have several options for lenders of home improvement loans, often including your current mortgage lender. Shop for the loan that has the payment schedule and budget that meet your home improvement needs. Some borrowers worry about several inquiries into their credit report damaging their credit rating, the credit bureaus typically lump similar inquiries into a single incident, limiting their effect on your credit score.

3. Secure approval

   Lenders consider many factors in determining if they are willing to make a loan. They look at the borrower's income and debts. If you plan to use your home as collateral, the mortgage company has it appraised to determine its value. Lenders require borrowers to complete a great deal of paperwork before issuing the loan.