Top 4 Home Improvement Financing Must-Haves

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What To Look Out For W
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Borrowing money to finance home improvement projects can be tricky.  After Hurricane Harvey, many Houston Texas metro area homeowners are in need of some extra funds to help with their home repairs and/or remodels. In this post, we are providing some great and helpful information especially for those who have found that their insurance is not covering the damages to your roof or siding and or your insurance has a large deductible.

Our Team at Texas Home Exteriors has put together this helpful and informative article to help Houston homeowners learn what home improvement project financing options are available to them and which would be the best option to meet their needs. In this post, we have also shared some warnings to be aware of when considering home improvement financing. 

Homeowners Beware

Education yourself with your financing options is the key. It is important to understand what you are getting into when looking into getting a home improvement loan. Before you sign the financing documents, make sure that you know exactly what you are signing up for, what you are getting! Many homeowners need the help so badly, they get a bit hasty. We have heard stories from homeowners about how they wish they had known what to look for as to not get taken advantage of. Below we have outlined the four most important items to check off your list when applying for home improvement repair financing. 

1 – Ask For A Non-Lien Loan

Often times homeowners in our Houston Texas metro area will choose to go to their bank or credit union to ask for a home improvement loan because they personally know them and trust them. Keep in mind, banks and credit unions often want to secure their vested interest. What this means the homeowner is, if for some reason you are not able to pay off the loan or you default on the monies borrowed. If this is the case, the bank can take possession of your home. If this does not sound appealing to you, you always make sure that you secure a non-lien loan for home improvements or repairs. This is also often referred to as a signature loan

2 – No Surprises Hidden in the Loan Documents – Promotions & Addendums

No one likes surprises with it comes to their finances. There can be hidden changes in loan documents, this is why it is important to review every page. No one likes surprises when it comes to their money. An example of a hidden surprise is like with some credit card offers, they start off with a great rate but after a promotional period has ended, the rate jumps up, typically quite a bit.

So, when looking through the loan paperwork, make sure that you read carefully, the details of the promotion and/or addendums which can alter or override what you are paying. If a promotion is offered, for instance, at a lower rate, make sure that this is for the life of the loan or if there is an increase, when and how much to determine if it is what you really want. As long as there is not an  addendum stating that there will be a rate increase, you are good to go. Do yourself a favor and please take the time to look through all of the documentation before you sign. 

3 – No Prepayment Penalty

This is a must-have. When signing for a home improvement loan, you should look for the option to pay the loan off early without any penalty. With a no prepayment penalty loan, by choosing this option, you are free to pay the note off early without being charged a penalty. Some banking institutions insert a clause in their contracts stating that you can not pay off the note early or you will pay a penalty, this is usually implement for the first year or two of the loan. The loaning institutions do this so they can make plenty of interest from you on your loan before paying it off. So if you don’t want to pay extra money out in interest and would like the option to pay it off early, make sure you get a home improvement loan that specifies no prepayment penalty. 

4 – No Closing Cost 

Lady thinking about financing for home improvements Closing Costs are often called by a variety of  names and can include numerous fees (such as loan origination fees, discount points and credit report charges). These are upfront fees charged to the borrower. This one is common, especially if you are going through a bank.

It is a good idea to make sure that whomever you are looking at getting a home improvement loan through, you know if there are additional fees involved, especially if you don’t want to be paying additional money, you should avoid paying any kind of closing cost.

Some financial institutions such as a bank might also call this an origination fee. Either way, you should be aware that they may try to tac on these additional fees, you should not have to pay anything upfront such as a closing costs. 

Quick Home Improvement Pointers 

  • You should never be pressured
  • Make sure you get a hard copy of your home improvement financing document or have it sent electronically to your email
  • Review the 4 home improvement financing must-haves listed above before signing 
  • Ask questions and insist on verifiable answers on financing to fund your project with

Here are some helpful web links:

LifeHacker – Finance Home Improvement Projects

Realestate.us – Fund Major Home Improvements

ThisOldHouse – Finance Your Remodel  

Home Improvement Financing Conclusion 

When looking at financing options for home improvement, it is of most importance to know what you are getting. We hope that you have enjoyed this informative post on how to protect yourself  when it comes to home improvement project financing. Regardless of you are updating, remodeling or just making repairs after a storm or hurricane, we have shared this helpful information to get you on your way. Please do not forget the four must-haves as you move forward! Thank you from the Texas Home Exteriors Team.

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