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Sunday, June 26th
LendingClub used to crowdfund all of their home improvement loans through investors. But, after undergoing some changes, their lending is now structured more like a regular bank. They offer fixed-rate loans with repayment terms of at least 36 months, and recent customer feedback is very positive. You should have a good experience if you choose to get a home improvement loan here, but we're holding back a higher recommendation while they continue proving out their new structure.
With a name like Personal Loans, you'd think this referral service would be the best all-around choice for borrowing money. Not so much. You'll be asked to provide extremely detailed personal information, including your SSN and employer's contact information, only to be given a list of lenders you could choose to approach for a loan. Although Personal Loans' reputation has improved over the years, there are still much better options out there for getting the cash you need.
If you're looking to finally renovate that kitchen straight out of the 70's, or build on the extra bedroom you need, chances are good that you don't just have the cash sitting around to get it done. Most homeowners use a home improvement loan to access the funds required to turn their house into a "home sweet home" .
There are several types of financing that can be used to make improvements or repairs. These depend on a variety of factors: the amount of equity you have already built up in your property, your credit history, and the amount of money you need.
If you have little equity in your home - in other words, you haven't made many payments on your mortgage yet, and you didn't put down much money at closing - you'll most likely use a home improvement loan to fund your projects. These loans are based on your overall credit history; the higher your credit score and the lower your debts, the better rates and terms you'll get.
On the other hand, if you've built up equity in your home, you'll be able to access three other types of home improvement loans: cash-out refinancing, a home equity loan (HEL), and a home equity line of credit (HELOC). Each type has its ins and outs, and not every loan type is appropriate for a particular borrowing need. For example, a cash-out refinance is great if you can reset your mortgage at a much lower interest rate - but it also comes with closing costs (which can sometimes be rolled back into the loan amount). HELOCs let you take money out as-needed, but interest rates can be higher than some home equity loans and are often adjustable: your payments may increase in the future.
As you can see, choosing a home improvement loan leaves you with some research to do. While considering your options, here are some guidelines to help clarify which service you should use:
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