Our Sponsors

Get the Best Rate on a Secured Home Improvement Loan

What is the best option for a home improvement loan secured for a homeowner? The best interest rates are usually found with a home improvement loan secured by the equity in your home or secured with another asset as collateral.

Collateral is something of value, including your home, stocks or bonds, that the lender can rely on for repayment of the amount that you borrow for your home improvement loan secured. Should you not repay the home improvement loan secured, the lender can take the collateral to satisfy the debt.

Because this gives the lender some certainty regarding repayment, it can lend you money at a lower rate than if you simply had a home improvement loan secured on your name. A home improvement loan secured by collateral allows you to borrow more money and get a better rate. The collateral used to guarantee the home improvement loan secured is frequently your home. To find how much you can borrow, determine the appraised value of your home in the real estate market and subtract the principal value of any existing mortgage(s). The appraised value of your home can be estimated using recent sales of similar homes in your neighborhood, commonly found in tax records for the town or county where you live. You can call your local government to find out how to search the land records to find a comparable value. Sometimes you can use the tax assessed value to estimate the value of your home. Depending on how closely the tax assessment follows the actual market, the tax assessment may give you an idea of the market value. This calculation shows your equity in the home and, in effect, what you would get if you were to sell the home and pay off all of the existing mortgages on your home improvement loan secured.

Your home improvement loan secured won't usually come in its entirety. To find what you can borrow on a home improvement loan secured, calculate the loan to value ratio (LTV). If the ratio is 80%, a common figure, multiply the appraised value of your home and subtract from that the principal value of all mortgages. You'll find what you can borrow on your home improvement loan secured.

Something other than your home, such as stocks, bonds or even a paid off car, uses somewhat the same process for a home improvement loan secured. The lender evaluates the collateral on two criteria: the ease of selling the item and the risk that the value will change. Stocks and bonds are very easy to sell, but they can change in value. The lender of your home improvement loan secured will use a calculation similar to evaluating your home.

A home improvement home secured by some form of collateral will be the least expensive solution for financial need. Replacing your windows, redoing your kitchen and other projects make your home more affordable and valuable with a home improvement loan secured by collateral.

Site Sponsors