What is a renovation loan?
Renovations loans are installment loans that homeowners take out to repair or improve their home. You may want to:
- Fix a broken pipe
- Repair a leaky roof
- Upgrade appliances to improve energy efficiency
- Renovate a room
The renovation may make your home more comfortable, fix a small problem before it becomes a major issue (and expense), or make improvements that could help you get a higher sale price.
New buyers may also take out a home renovation loan when they’re buying a fixer-upper. In these cases, the loan may be in addition to their mortgage, or they may be able to get a single loan that covers the cost of the purchase and renovations.
Types of home renovation loans
Two of the most common ways to fund renovation projects are by taking out a personal loan or using your home as collateral to get a home equity loan or line of credit.
Personal loans are generally unsecured loans that you can use for almost any type of expense. Your rate, term, and loan amount may depend entirely on your creditworthiness and the lender.
A home equity loan or home equity line of credit uses your home as collateral. These secured loans may be easier to qualify for, and you might be able to get a better rate than you could with an unsecured loan. However, the lender may be able to take your home if you default on the loan or have a lien on the home for the life of the loan until you pay off the loan.
Who offers renovation loans?
Online lenders, banks, and credit unions may all offer personal loans and home equity loans or lines of credit. Additionally, mortgage lenders may provide home renovation loans. Compare your options before borrowing, as the rates, terms, and requirements can vary depending on the lender.
There are also government programs that could help you qualify for a low-rate renovation loan when you’re buying a new home or making improvements on your current home. Research these options to learn about the pros and cons and to see if you qualify.
A RISE renovation loan
RISE is an online option that offers unsecured personal loans that you can use to fund your home renovations.
The loan can be relatively expensive and might not be the right choice if you want to make an unnecessary change or improvement to your home. However, a RISE loan may be best for borrowers who have trouble qualifying elsewhere due to a low credit score or insufficient credit history.
RISE helps borrowers who may have trouble getting approved elsewhere get the funding they need for home renovations. After all, every homeowner has to quickly handle repairs and maintenance to protect their investment.