Home Renovation: Sources For Financing

Whenever you are thinking about renovating a property, the question as to whether you will be able to afford home improvements or not always rises. Then, the idea of financing the home renovation comes along right away but not everyone is familiar with the different sources of funds available for financing such projects. Following is a list of possible solutions to help you fund a home repair or home renovation project by providing the amount of money you need.
Cash In Your Home Equity

Equity is the difference between the amount of debt secured with a property and the actual property's value. Home equity is thus available property value that can be used to secure other financial products. There are two financial products that can take advantage of available equity in order to provide additional financing apart from a mortgage loan: an equity loan or cash-out refinancing.

A home equity loan is an additional loan usually known as second mortgage that resorts to the equity vacant on your property to guarantee the repayment of the loan. Loans based on equity provide high loan amounts but are limited to the amount of existing equity. Nevertheless they surely can provide the necessary funds for home restorations or improvements. Also, as an alternative to these loans you can use an equity line of credit which will provide you with a revolving account perfect to use for home improvements and redecoration.

Cash-out refinance home loans are a different kind of product. By refinancing you are cancelling the previous mortgage and replacing it with a new loan product. With cash-out refinance home loans, you make use of the available equity in your property and get a loan with a higher amount than the previous outstanding debt and thus, the extra funds can be used for any purpose including home renovation.

Non Equity Solutions For Home Renovation Financing

If you do not have sufficient equity available on your home or you just do not want to use your property as collateral for a loan because you fear foreclosure, there are alternatives available that are unsecured and thus do not require you to put any asset as collateral for the loan. However, bear in mind that as opposed to home equity loans and lines of credit or cash-out refinance home loans, unsecured loan products charge higher interest rates and therefore will end up being more expensive. Moreover, the interests on unsecured loans are not tax deductible like the interests on loans based on equity.

Nevertheless, if you want to resort to unsecured financing, there are unsecured personal loans and unsecured lines of credit available for home renewal or home improvements. The requirements for approval may be a little stricter than those of secured loans and lines of credit but still, approval is not that harsh. There are even unsecured personal loans and lines of credit for home improvement specially designed for those with bad credit, no credit or past bankruptcies. Though the requirements for approval on those loans are simple and thus qualification is guaranteed, the interests you will have to pay for the money owed are significantly higher and can even double the rates charged by credit cards.



About the Author
Amanda Hash is an expert financial consultant who specializes in Free Debt Consolidation and Bad Credit Private Loans. By visiting http://www.yourloanservices.com/ you'll learn how to get approved and recover your credit.