It can be expensive to update your home.
That’s where a personal loan can come in handy. You can use it as an alternative to a Home Equity Line of Credit (HELOC) or Federal Housing Administration (FHA) loan and cover your home improvement projects.
Here’s what you need to know about personal loans for home improvement projects.
A home improvement loan is a personal loan you can use to finance just about any home-related project. A few examples include kitchen remodels, solar panel installations, siding replacements, and deck additions.
You may even use a personal loan to repair damage from a natural disaster like a flood or earthquake if you don’t have insurance or lack enough coverage.
It’s important to consider the benefits and drawbacks of a home improvement loan, including:
If you do opt for a home improvement loan, be sure to shop around to find the best deals and terms for your unique situation.
Related: Learn more about getting a personal loan
If you want to apply for a home improvement loan, follow these four steps:
- Review your credit: Go to AnnualCreditReport.com and request free copies of your credit reports from the major credit bureaus. If you notice any errors, dispute them directly with the appropriate credit bureau. This can increase your credit score and make you eligible for a lower interest rate.
- Shop around: Not all home improvement loans are created equal. Do your research and prequalify for loans from multiple lenders without any impact on your credit score. Prequalifying gives you an idea of the loan amounts and terms you may be offered.
- Choose a lender and apply: Pick a lender that meets your needs and fill out the application. Most lenders will let you apply online from the comfort of your home or office. Be prepared to submit documents like tax returns and bank statements.
- Receive your loan funds: Upon approval, you’ll sign a loan agreement. Then, the lender will disburse your funds, usually via direct deposit. This may take anywhere from one to seven business days.
Related: Learn more about getting a personal loan
If you decide that a personal loan for home improvement projects isn’t right for you, consider these alternatives: