If you are tired of your home not looking as cool as all those homes on home improvement shows, consider taking out a home equity loan. Of course, you should only consider this seriously if you have already lived in your home long enough to build up equity. One of the biggest reasons that people use a home equity loan to improve their home is because the terms of the loan, even these days, can be better than the terms of a loan you would get financing it through other means. There is a general rule that may or may specifically apply in your case regarding a home equity loan, but usually does: a homeowner is allowed to borrow up to 80% of the equity he has built up in the home.
Home equity loans are all about fixed interest rates. The good thing about this is that you know exactly what those dang payments are going to be for the full extent of the loan. For this reason, most people getting a home equity loan to fix up the old homestead will actually borrow more money than is needed for the renovation plans they have. Why? Because they can use the home equity loan to also consolidate things like those damn student loans, credit card bills, and any other outstanding debt. The reasoning behind this is that those fixed interest rates on a home equity loan tend to be lower than the interest rates on those other loans. And unlike those killer student loans, the home equity loan doesn’t actually seem to get bigger with each payment. (What’s the deal with that, anyway?)
There is one fairly significant downside to choosing the home equity loan to spruce up your house and belongings. In order to qualify for the all way cool things that a home equity loan can do, you’ll have to get an appraisal done on your home. These appraisals are not inexpensive endeavors; expect to pay several hundred dollars. The good news is that when things are not going well for banks (and I think our current situation covers that pretty completely) you may actually be able to wrangle a deal in which the bank will cover the cost of the appraisal. Of course, there is also the possibility that the bank will avoid covering this cost because they like to whine so much about not having enough money.
Banks! The most useless entity ever created by man.
Check the paperwork closely on your home equity loan because the scumbags who run the banking industry love to put in a little secret that makes absolutely no sense. Yes, Virginia, you may actually be forced to pay the bank a penalty if you prepay up on the home equity loan. I’ve said it before and I’ll say it again: banks are the repository of the guys that Satan thinks is too evil to welcome into hell.
When you go into a bank to get down on your knees and beg the Gods for a home equity loan you may be met with something wonderful the bank likes to call a Home Improvement Loan. Guess what? This is just another word for a home equity loan. A Home Improvement Loan is just another way for banks to trick you with phony marketing techniques. In other words, the bank wants you to only use that home improvement loan to improve your home, but this is still America and if you want to use that money to travel down to Disney World, well, you just go right ahead. So why do banks use the home improvement enticement?
Because they can read the ratings figures for all those shows about making over a dumpy little two bedroom home into something that the Queen of England would be proud to act stuck-up in by telling you not to look at when you dare address her. Bank owners may be pure evil, but they aren’t stupid. They realize the effect of all these shows that actually make people think they can completely transform their home with an extra $10,000. The seeds of Satan who work at the banks are counting on your excitement over what you just watched on TV and so they dangle the words Home Improvement in front of loan to get you into the bank.