If you have home improvement projects on your schedule, you’re probably considering funding them with loan services. After all, according to a Houzz study of homeowners, the anticipated budget for a typical home remodeling project is $10,000, and renovation projects are well known for their ballooning costs. One option to evaluate is a home improvement loan. Here are some basic facts about how this loan service works.

What Is a Home Improvement Loan?

While the term can refer to several different loan types, it’s typically the most common and unsecured personal loan. The loan is ‘unsecured’ because it is not issued based on home value or equity. These loans typically have a lending ceiling of $100,000, along with a minimum loan size of $500-$5,000.

Like most loans, late or missed payments are recorded by the national credit bureaus and can lower overall credit scores. Conversely, timely payoffs will raise your credit score.

What Are the Requirements?

This type of loan service is based on credit scores and history. Most lenders require a FICO® score of at least 580. A higher credit score will grant access to lower interest rates and better loan terms.

Taking out a larger loan can mean a longer loan period and fewer interest costs in the long run. Small loans tend to have the highest interest payback schedule. 

What Are the Benefits?

A home improvement loan makes budgeting for renovations easier. Instead of fluctuating monthly costs, there is a set payment amount. They are useful for homeowners with low equity, or those who need more funds than are provided under credit card terms.

Also, unlike home equity-based lending, your house is not at risk if you are forced to default on a personal loan. Applications for these services also take less time to process than other types of home loans, meaning your improvements can take shape sooner.

If you’re interested in learning about the home improvement loan options available to you, contact Putnam 1st Mercantile Bank in Cookeville, TN. A locally owned community bank, they are happy to provide support for your home renovation project. Call them at (931) 528-6372 to speak to a member of their experienced staff today. You can also visit them online to learn more about their specific loan services.