Poor Credit Home Improvement Loan

A poor credit home improvement loan is a great way to finance the alterations and decoration you need in your home. Maybe when you bought your house you were newly married. The place was cozy. However now with two growing children your house has turned from cozy to rather too snug for comfort. That’s when thoughts turn to extensions, loft conversions and the like. The trouble is, money has been tight, giving the kids all they needed and wanted, and of course you wanted vacations too. The car needed repairing.

They say trouble comes in threes, but to you it has felt more like the bills were breeding indiscriminately. So, you hit trouble with your mortgage and took out a loan to ensure you kept a roof over your heads. Then it got difficult to repay that loan as the kids needed new shoes; and there was that school skiing trip too. All this is adding up to you having poor credit; home improvement loan opportunities are still out there for you too, though, so don’t despair.

What is a Poor Credit Home improvement Loan?

Well, to give the obvious answer for just a minute, it is a home improvement loan which is specifically designed for people who have a poor credit history. Does that sound like you? A loan for a person with a low credit scores can be spent on whatever you wish, so it offers the perfect opportunity for you to extend your home or upgrade your facilities to lead the life you wish in the home where you want to live. No moving to a smaller or cheaper home or making do with substandard kitchens or poor bathrooms.

How is this Possible?

Believe it or not, there are many lenders who don’t care anywhere near as much as you do about your poor credit; home improvement loan packages are offered by them. Such lenders know that the vast majority of people acquire poor credit ratings through one-off circumstances like unemployment, divorce or illness. They don’t hold against you what could happen to us all. They know you are really capable of managing your finances, so they readily extend the offer of a poor credit home improvement loan to you anyway.

Do I need collateral?

No, you don’t. You can get a home improvement loan without putting up your house, car or other valuable possessions as security against the prospect of defaulting on your loan repayment. That said, an unsecured loan is likely to cost you in higher interest, so think carefully about this choice of whether to offer up collateral before applying for such a loan.

What’s so Special about a Poor Credit Home Improvement Loan?

Lenders are realists, right? They want their money back. They know that if they place unreasonable demands on you as a borrower, you won’t be able to keep up with the terms, and that helps no one. So you will find that this loan is likely offered on a longer repayment period, which makes your monthly bill more affordable, especially if you can secure a loan with a low rate of interest.

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Using your Credit for a Home Improvement Loan

Home improvement loans are designed to help a homeowner make improvements to their home. They are specifically given to be used for home improvements and may actually be easier than to obtain than other types of loans. This is because a home improvement loan helps to build equity in the home, so it is actually going to be making money. The current equity in the home is what is used to base the loan upon.

The Basics

A home improvement loan is considered a low risk loan. It is secured with the home equity and is used to raise the equity in a home through improvements. It must be used to make home improvements. The main criteria for securing this type of loan is that the person owns the home and has some equity built up in the home.

The main uses for this type of loan are to make improvements or up dates to a home. Often they are used for major remodeling projects or major additions. There are two basic types of loans – the traditional home improvement loan and a FHA Title I home improvement loan.

Types of Loans

Traditional loans require about 20 percent or more equity built up in the home. The loan is taken through a lien on the home because it is basically an advance of the equity that is in the home. They are usually for a term of up to 15 years. The interest rates are usually much lower than other loans due to the low risk.

FHA Title I loans are made through the government. The type of improvements are restricted under this program, though. Some improvements such as swimming pools, are not allowed. The borrower does not need equity to secure this type of loan. This loan is good for people with credit problems and no equity. The term can be up to 20 years.

Any loan where the amount borrowed is under $ 7,500, a lien is not taking. The requirements for such a loan may also be less strict. They are also much easier to get and may offer much better terms and interest rates.

Making a Good Choice

Just as when shopping for that initial home loan, a home owner should shop around for an improvement loan. It is important to look for the best deal. Not all loans are the same and banks will differ in their terms. It is best to look at a few options and choose the one that will work best for your situation. Also, it is best to avoid borrowing too much, only borrow what you need. It helps to get some estimates on the work before ever looking for a loan.

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Will Your Credit Allow For Home Improvement?

Article by Greg Hansward

We use home improvement loans because they were created to help us make improvements on our homes that we couldn’t otherwise afford. These loans can be used for things like adding an extra room, putting in a pool for our family in the summer, re-doing a kitchen or bathroom, or even replacing old carpet with new.

These are secured loans, which means that collateral is required which is usually based on the current equity in the home. In order to qualify for tax deductions, the improvements must be on the your primary residence, not on second homes, rental or vacation property.

Interest rates on your home improvement loan is usually lower than other secured loans since it is deemed as less risky and tends to improve the borrower’s home. You must own your home or be financing your home to be qualified for a home improvement loan.

These loans are intended to help you the borrower add additional features to your home. The most popular home improvement is kitchen and bathroom remodeling, however other things such as installation of a new roof, adding a garage, or installing a pool are other frequently done improvements. The two most common types of home improvement loans available are; FHA Title I Home Improvement Loans and Traditional Home Improvement Loans

With both, you must either own or be in the process of buying the home since it’s going to be used as collateral for the loan. When going for the Traditional loan you must have considerable equity in your home, usually upwards 20%. Your current equity in the home, as well as that created by the improvements, is your collateral. The lender then secures the loan taking a first or second lien.

Usually, home improvement loans are allocated for ten years or less, however some lenders may have programs that will allow for up to 15 years, depending on how much money is borrowed. Just like mortgages, interest paid on your loan is tax deductible. The Interest rate on home improvement loans is frequently considerably lower than personal loans because lenders consider those very risky.

An FHA Title I Loan is a U.S. Government program that helps you improve or rehabilitate your home much like a conventional home improvement loan.

This program is obtainable through various lenders, commonly banks. Some types of luxury improvements such as swimming pools and barbecue pits aren’t allowed under this loan. With Title I loans, you aren’t required to have any equity in your home for collateral. The loan period can be up to 20 years and you can have some past credit problems, providing you’ve shown recent acceptable credit.

On loan requests below $ 7,500, the lender will not take a lien on the home. The requirements are less severe than conventional home improvement loans and make it easier for a greater number of home owners to partake. As an added bonus, the interest paid is tax deductible.

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What Kind Of Home Improvement Can I Do With Bad Credit?

Article by Devora Witts

When someone needs to make home improvements and does not have the cash needed to pay for them, the usual solution is a home improvement loan. However, having bad credit may be an obstacle to obtaining high amount loans. Therefore, many people wonder what kind of home improvement can be done when the home improvement loan applicant has bad credit. The answer to this question is not simple because there are too many variables involved.

There are different kinds of home improvement loans and therefore, the type of loan will determine the amount of money you can obtain and consequently the type of improvements that you can afford. Also, the financial and credit situation of the applicant can also modify the final loan amount that the lender will be willing to offer. And last, but not least, whether the applicant can offer any kind of guarantee for repayment other than equity will also determine the loan amount and type of improvement that can be made.

Improvements With Unsecured Home Improvement Loans And Secured Ones

Unsecured home improvement loans are personal loans that are used for making home improvements. Since these loans carry no security the risk is high and so is the interest rate. But most importantly, the amount of money you can borrow by these means is also limited. Therefore, only minor home improvement like repainting, retiling, fixing pipes, roofs, etc. can be afforded with these loans.

However, with secured home improvement loans, the situation differs. These loans are guaranteed by equity and therefore, the amount you can obtain is determined by the amount of free equity on your property. Since these loans provide higher loan amounts usually measured in tens of thousands, it is possible to undertake bigger home improvement projects like adding a room to a house, carpeting all the property, replacing the whole electric, water or gas internal system, etc.

How Bad Credit And Harsh Financial Situations Affect What You Can Improve

Bad Credit will limit your ability to finance improvement projects. In order to get approved for a loan for home improvements you need a fair credit score and a suitable income for repaying the money you owe. Bad credit will determine the possibility of undertaking only small home improvement projects while you are struggling to recover your credit because no high amount loans will ever be available with bad credit unless you provide collateral or get the aid of a third party.

<b<How A Third Party Can Help You Overcome Bad Credit

If you are desperately in need of making home improvements and you can not obtain the money by other means, you should consider the aid of another family member. Sometimes the head of the house makes wrong decisions and ends up with a bad credit score. However, other members of the household may be able to act as co-signors for the loan with a good credit record that will guarantee approval from the lenders due to a significant reduction of the risk involved in the transaction.

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Poor Credit Home Improvement Loans – Poor Credit Home Loan Options

Article by Reginald Ross

Before deciding to go for home improvement home loans think about the repayment terms and your resources to pay back the loan.Home improvements are costly. For this reason, many homeowners choose to finance the project. There are many ways to raise funds to complete home improvements. Although some people choose to use a credit card or store charge card, high finance fees make is practically impossible to repay the balance. Instead, consider applying for a home improvement loan.

Advantages of a Home Improvement Loan

Getting an unsecured home improvement loan is difficult with good or bad credit. However, having bad credit will make it exceptionally hard. Fortunately, bad credit home improvement loans are available. The secret is finding a lender that is willing to offer reasonable rates.

Once you secure financing for a home improvement project, the money can be used to repair a roof, build a spare bedroom, home upgrades, and improve the living space. Some individuals with bad credit avoid financing a home project. While saving money for a home project is ideal, and a great way to remain debt free, this approach will prolong a home improvement project.

Ways to Obtain a Home Improvement Loan with Poor Credit

Before determining that a home improvement loan is unfeasible, contact several lenders and discuss your lending needs. In most cases, a bank or credit union will be unable to help you. On the other hand, if a bank offers sub prime loans you may be a good candidate.

If you have a low credit score, you will not qualify for an unsecured home improvement loan. However, a lender may approve you for a secured loan. If seeking a small loan, consider securing the loan with a piece of property. A vehicle title may be sufficient to obtain financing.

For major home improvement projects, take advantage of your home’s equity. Various lenders approve home equity loans regardless of credit. Of course, if you have poor credit, your interest rate will be slightly higher. Still, these rates are good in comparison to credit card rates.

If acquiring a home equity loan to finance a home improvement project, do not accept a loan without fully accessing your finances. Is another monthly payment affordable? If your finances are tight, avoid accumulating additional debt. A home equity loan is secured by your home. If you become unable to maintain timely payments, you risk losing your home and equity.

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Who Qualifies for Home Improvement Tax Credit?

Article by Anna Peacocks

There are a number of ways by which a person can reduce his tax liability or increase tax refund, of which home improvement tax credit is one. Home improvement includes renovation of home or permanently adding certain items to the house to increase its value as also its habitability. Hence, loans taken for this purpose are eligible for tax deduction. Not only such loans, but also expenses of certain nature amount for qualification for the tax deductions. Tax credit differs from tax deduction in that the former reduces the tax liability of a person, whereas the latter causes reduction in the taxable income of a person.

Improvements which come under the purview of home improvement tax credit are:- Installing energy-efficient items like solar panels, geothermal heat pumps, water heaters that are solar-powered or fuel cells.- Methods adopted for heating or cooling the home, such as sealing doors, windows, pipes and so on.- Improvements, done specially for ailment reasons, such as installing elevator for heart patients to prevent them from climbing the staircase.- Improving the air filtration of the house by installing centralized air-conditioning systems, removing damp walls, etc helps asthma patients.- Expenses incurred for accommodating handicapped or disabled individuals such as railings along the staircase, widening the doors of the home, making modifications in the kitchen for helping disabled people, etc.- Using water heaters that run on certain fuels like propane, gas, oil, etc. is helpful for people living in scarcely populated areas.- Selecting better doors or windows and making roof improvements are also eligible for the credit.Home improvements can be of two types- splurging on luxuries or addressing basic problems that need immediate attention. Improvements that add to the home’s functional space are valued longer than those that just decorate the look of the house.

Obtaining the loansFor availing loans for home improvement, we need to make an estimate of the amount of money required for such purpose and submit it to the financier or bank. After verifications with the constructors, the financier visits our home. However, some banks inspect the receipts of the payments we make to the contractors and then sanction the loans.

Tax Credit for Home ImprovementThe IRS (Internal Revenue Service) lays down strict guidelines by which a home owner can claim home improvement tax credit. Tax benefit for this loans can be claimed just like home loans. Tax credit availed is a percentage of the expenses incurred on improvements, up to a certain amount. When arriving at the decision for making renovation, one must consider the amount of investment to be made. Although cheap improvements still qualify for tax credit, one can get the maximum benefit out of it by carefully weighing all the qualifications as some improvements do not carry tax credit benefit.

The amount of tax credit is 30% of costs incurred, with no upper limit on the total home improvement tax credit amount. This rate is applicable till 31st December, 2016. Individuals can also avail of income tax benefit of interest up to Rs.30, 000 on the loan (U/S 24 of the Income Tax Act) on self-occupied house. For rented property, tax deduction is not bounded by any limits.

It is advisable for individuals to maintain precise records of all expenditures on their renovations and the receipts of such expenses as it would be of great assistance to them when it is time to claim the home improvement tax credit.

Anna has been writing articles online for nearly 3 years now. You can find more information home improvement ideas such as bathroom remodeling ideas or kitchen remodel ideas at DIYYourHouse.com