Where Can You Get the Best Home Improvement Loans? Need some extra cash to make some changes to your house? Home improvement loans are here to help you tackle those renovation projects. Whether you're planning to overhaul the kitchen with all-new cabinets and countertops, get rid of that 70s-style bathroom, or add curb appeal to your property, these loans provide the financial support you need to make it happen.
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Prosper takes a unique approach to funding home improvement loans. It's the only service on our list that works as a peer-to-peer lending platform (although there's one other company that used to operate that way too). Since 2005, Prosper has been connecting people through investments, serving as the middleman between those who want to invest in their neighbors (figuratively speaking) and those who want to borrow from them.
Choose between personal loan or HELOC
Prosper is one of the few options on our list to give you the choice between a home improvement loan structured as a personal loan OR a HELOC/HELoan. You'll want to consider those options carefully: the personal loan will let you borrow up to $50,000, while the HELOC/HELoan can make up to $500,000 available to you. Naturally, those are the maximum amounts and not every borrower will qualify to take out a loan for those amounts. And, of course, you need to remember that a personal loan doesn't use the home itself as collateral, which has its own pros and cons.
Be sure to indicate it's a home improvement loan
But, for simplicity's sake, and since most people applying for a home improvement loan aren't necessarily looking for a HELOC, let's just look at the $50K and under option at Prosper. You'll enter the amount you'd like to borrow (from $2,000 to $50,000), and click "check your rate", and then select "Home Improvement" as the reason. This is more important at Prosper than at other lenders and platforms on our list. Why? Because it's a peer-to-peer platform: on the investors' side, they choose which loans to invest in, based on prospective borrowers' credit profiles and also what they're borrowing for. So, if you accidentally put in "Taxes" or "RV" as your reason for taking out a loan, you may be passed over by investors who aren't interested in funding those loan purposes.
Don't be surprised by origination fees
Origination fees? In a word, yes, you should expect them with Prosper. It'll depend on your overall borrower profile, but it'll range somewhere from 1%-7.99% and be deducted from your loan proceeds. And, good news: if you pay back your home improvement loan early, you could qualify for a refund of any unearned portion of that fee that's over 5% of the original principal amount.
Funding may take longer
Once your application has been accepted, the wait begins. Prosper "may" get your loan funded as quickly as one business day, but you're at the mercy of the lenders who choose to invest in your loan. That's one reason for Prosper not ranking higher on our list: the peer-to-peer aspect introduces some delays that you might not experience somewhere else. Maybe that's not an issue if you're flexible on your renovation schedule, but it could be a problem if you have repairs that need to be made ASAP.
Decent feedback despite complaints
How about reputation? Prosper had an "A+" rating and accreditation from the Better Business Bureau at the time of our evaluation, but also more than 450 complaints over the last three years. While we don't love seeing that many complaints, we're pleased to report that all of them received prompt, appropriate responses from Prosper reps. And, on another positive note, over 10,000 people took the time to leave a 5-star review for Prosper on Trustpilot. The process is described as streamlined, especially for repeat borrowers, and most people say that their loans are funded within a matter of days.
Good enough for many borrowers
Prosper comes in as solidly above average overall. It's a unique way to get a home improvement loan, though that novelty may come with some delays in funding (but nothing super-significant; you're not waiting for months). Prosper comes in lower in our rankings because of the origination fees, and because their interest rates aren't the most competitive. However, as a lender overall, there's nothing unreliable or not worthy of trust here.
Continued from above...
Need some extra cash to make some changes to your house? Home improvement loans are here to help you tackle those renovation projects. Whether you're planning to overhaul the kitchen with all-new cabinets and countertops, get rid of that 70s-style bathroom, or add curb appeal to your property, these loans provide the financial support you need to make it happen.
When it comes to applying for a home improvement loan, going online offers you a convenient and accessible option. It's no wonder that online home improvement loans have become so popular. With just a few clicks, you can explore a variety of lenders and loan terms from the comfort of your own home.
Online applications streamline the process, eliminating the hassle of in-person appointments and extensive paperwork. Instead, you can submit your application quickly and easily, receiving loan offers and getting funds deposited - all without ever leaving your computer or smartphone.
Before you start filling out applications, it's important to understand that not all loans labeled as "home improvement loans" are structured the same way. Some are specifically tailored for home-related projects, while others, particularly those offered online, are often personal loans.
Personal loans provide you with a lump sum of money that you can use for various purposes, including home improvements. Unlike home equity loans or lines of credit (HELOCs), which are secured by the equity in your home, personal loans are unsecured and don't require collateral.
The distinction between personal loans and HELOCs is crucial for you to understand. HELOCs allow homeowners to borrow against the equity in their homes, making them ideal for large-scale renovations or projects that require substantial funding. While HELOCs may offer lower interest rates and tax benefits, they also come with the risk of losing your home if you default on payments.
On the other hand, personal loans offer you flexibility and accessibility. They don't require equity in your home, making them accessible to homeowners with limited equity or those who don't want to put their homes at risk. Personal loans often come with fixed interest rates and repayment terms, simplifying budgeting and planning for you. Additionally, the application process is typically faster, with funds disbursed quickly - sometimes within a few days of approval.
So, with all of the options out there, how can you tell where to start your search for a home improvement loan? Here are some ideas for sifting through the various platforms and choosing the right one for you:
Ready for renovations? The experts at Top Consumer Reviews have reviewed and ranked some of today's most frequently-used sites for home improvement loans, so that you can turn your ho-hum house into something truly Insta-worthy in no time.
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