Loan

Should I get a personal loan for home improvements?

A homeowner’s first instinct may be to get a home equity loan or line of credit when they need money for a home improvement project. But in some cases, a personal loan could be a better choice.



a wooden bench in front of a building: House deck under renovation


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House deck under renovation

With a personal loan, you know your total borrowing costs at the time you take out the loan, and you’re borrowing a fixed amount for a certain number of years with a fixed interest rate. To determine whether or not you should get a personal loan for home improvements, consider your priorities when it comes to interest rates, secured versus unsecured borrowing and tax benefits.

Should I get a personal loan for home improvements?

A personal loan can be a great way to finance a small to mid-sized home improvement project, like new windows or a room makeover. Whether or not a personal loan is the right fit for your next project really comes down to one thing: your financial health and history.

Before applying for a personal loan to finance your next project, it’s important to know both the benefits and the potential downsides. Here are a few examples to be aware of.

Pros

  • You won’t risk losing your home. If you can’t repay your home equity loan or HELOC, your lender can eventually foreclose, since these loans are secured by your home. While unsecured creditors can place a lien against your home if you don’t pay them – something many consumers are unaware of – the lien usually just makes selling or refinancing more difficult. It won’t get you kicked to the curb like a foreclosure will unless the creditor gets a writ of execution from a judge to force the sale of your property, which isn’t likely.
  • It’s easier to keep borrowing in check.
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Is an algorithm less racist than a home loan officer?

In 2015, Melany Anderson’s 6-year-old daughter came home from a play date and asked her mother a heartbreaking question: Why did all her friends have their own bedrooms?

Anderson, 41, a pharmaceutical benefits consultant, was recently divorced, living with her parents in West Orange, New Jersey, and sharing a room with her daughter. She longed to buy a home, but the divorce had emptied her bank account and wrecked her credit. She was working hard to improve her financial profile, but she couldn’t imagine submitting herself to the scrutiny of a mortgage broker.

“I found the idea of going to a bank completely intimidating and impossible,” she said. “I was a divorced woman and a Black woman. And also being a contractor — I know it’s frowned upon, because it’s looked at as unstable. There were so many negatives against me.”

Then, last year, Anderson was checking her credit score online when a pop-up ad announced that she was eligible for a mortgage, listing several options. She ended up at Better.com, a digital lending platform, which promised to help Anderson secure a mortgage without ever setting foot in a bank or, if she so desired, even talking to another human.

In the end, she estimated, she conducted about 70% of the mortgage application and approval process online. Her fees totaled $4,000, about half the national average. In November 2019, she and her daughter moved into a two-bedroom home not far from her parents with a modern kitchen, a deck and a backyard. “We adapted to the whole COVID thing in a much easier way than if we were still living with my parents,” Anderson said this summer. “We had a sense of calm, made our own rules.”

Getting a mortgage can be a harrowing experience for anyone, but for those

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New funding expands Home HeadQuarters grant, loan programs for homeowners

Syracuse, N.Y. – Local officials today announced the expansion of grant and loan programs to help homeowners pay for repairs or renovations. The programs are administered by Home HeadQuarters, a nonprofit housing organization.

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Covid-19 emergency home repair grants: Bank of America is providing $100,000 to beef up this grant program, which provides income-eligible homeowners with up to $2,000 for emergency repairs such as replacing hot water tanks, repairing furnaces, and addressing other quality of life and safety issues. To qualify, you must have lost a job or substantial work hours because of the coronavirus pandemic. Home HeadQuarters said it already has more than 125 people on a waiting list.

Get more information here.

Solvay/Geddes home renovation loans: Homeowners throughout Geddes can now get loans of up to $25,000 for home renovations. The loans carry interest at 1% and are repayable over 10 years. They can be used for interior or exterior work and are available to all town residents regardless of income.

There is $2.3 million available in the loan fund, Onondaga County Executive Ryan McMahon announced today. The money comes from Empire State Development, the state economic development agency, as part of a $30 million revitalization program announced in 2014 for Solvay and the west shore of Onondaga Lake.

Previously, the loans were only available in the village of Solvay, were capped at $15,000, could only be used for exterior work, and were repayable over seven years.

In addition to loans, low- and moderate-income homeowners may qualify for grants to cover 25% of their improvements. Landlords can get loans at 5% interest for rental properties.

Get more information here.

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Are Your Loan Officers Employees or Independent Contractors

Many mortgage lenders/brokers treat their loan officers (who are their salespersons) as independent contractors. Those loan officers are paid on a commission based on the successful funding of a loan. The mortgage lenders/brokers pay the loan officers either as each transaction closes or on a periodic basis. The amount paid to the loan officer contains no deduction for federal, state or local taxes. Frequently, the loan officer does not receive any benefits, such as company-paid health insurance or paid sick or vacation time. At the end of each year, the mortgage lenders/brokers issue IRS Form 1099s to their loan officers.

As a mortgage lender/broker, you cannot classify whether your loan officers are independent contractors or employees. That task has been given to the Internal Revenue Service, the U.S. Department of Labor, your state unemployment insurance agency, your state department of labor and your state workers compensation insurance agency. Although each agency has its own guidelines, typically the determination turns on the degree of control that the mortgage lender/broker exercises and the degree of independence that the loan officer enjoys. When the mortgage lender/broker has the right to dictate what will be done and how it will be done, then the loan officer is an employee. The government agencies look at facts concerning the behavioral control of the loan officer, the financial control of the loan officer and the relationship between the mortgage lender/broker and the loan officer. The Internal Revenue Service has a 20 factor test to determine whether an employer/employee relationship exists. Such factors include whether the loan officer has to comply with instructions, gets training from the mortgage lender/broker, works exclusively for the mortgage lender/broker, whether the loan officer can independently hire assistants, whether the loan officer has set hours of work, whether there is a continuing relationship, …

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Home Improvement Loan or Personal Loan

Personal Loan or Home Improvement Loan? That is the question.

We love decorating our houses.

And there are phases in our lives when maybe we've spent too much time watching Food Food or TLC and thus have built castles in the air of visions of turning our kitchen into a chef's paradise. Or perhaps our master bath is just one shower away from a disaster. For we really do love Italian tiles on our bathrooms.

And if so, then cheers, you're not alone. Recently, the Joint Center of Housing Studies for Harvard University has investigated and reported that the home improvement industry should continue post record-level spending in 2016. For many people, this means borrowing money to pay for the well planned home improvements and home decorating schemes .

Now, one is ought to face a tough and difficult and perhaps hypothetical question.

So, which home improvement loan is right for you?

Many homeowners and homemakers look to tap the equity in their homes. But home equity loans or home equity lines of credit may not be possible or very practical for some borrowers. In that case, one should consider using a personal loan.

While it is known that one can use a personal loan for a variety of reasons, there are a few reasons why a personal loan can have advantages over home equity loans when it comes to a renovation loan, to be specific.

The application process for a personal loan is usually quite simple and quite straightforward. Your own financial situation-for example, your credit history and earning power; This is often the main deciding factor for whether or not you will be able to get a loan, for how much, and if so, at what interest rate. Some personal loans even boast of having no origination fees. …

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