When most people think of home improvement what home improvement is they think of all the little things around the house that they can improve or fix on their own without having to borrow money from a bank.  But many home improvement projects require some sort of financing because they are large scale projects that require a large sum of money all at once.  These larger home improvement projects require some sort of bank or lender issued home improvement money.

Larger home improvement projects that require financing could including adding an addition to your home, remodeling your home, upgrading the appliances and kitchen or bathroom, installing a new central air conditioner or furnace, replacing a roof or installing siding or simply putting in a new swimming pool.

There are two general types of home improvement financing.  There is an unsecured home improvement loan and a secured home improvement loan.  When you are first looking at home financing you will have decide if you want a secured or unsecured loan.  The differences are many, but here’s a general breakdown:

Unsecured Home Improvement Financing: An unsecured loan of any type is a loan you are taking out without any sort of collateral.  Only your credit rating and income level are really considered for loan of this type.  Home improvement credit cards fall into the unsecured home improvement financing category.  Unsecured home improvement loans are meant to be paid back over a short period of time and will generally have a higher interest rate.  The advantage to unsecured home improvement financing is you don’t need to have a home that has a lot of equity or “value above the purchasing price” to get this type of home improvement loan.

Secured Home Improvement Financing: A secured loan of any type is a loan which is backed with collateral, or something to trade, in exchange for the loan.  For home improvement financing purposes that is almost always your home itself and any equity or extra value the home may now have.  If you purchased a home for $100,000 but it will now easily sell for $150,000 then you have $50,000 in equity or value that you can use to finance home improvement projects.  Secured home improvement loans have a lower interest rate and usually have a longer payoff period.

Don’t despair if you have bad credit and wish to finance a home improvement project.  Even people with bad credit can get a home improvement loan if they follow a few common sense steps and are willing to pay a higher interest rate or borrow a little less money than they might normally want to borrow.

If you’re serious about borrowing some money for those needed home improvements, then you should definitely consider using a free no-obligation home improvement loan calculator to find out exactly what kind of loan terms you may qualify for. The process doesn’t cost you any more than a few minutes of your time and it helps you get an idea of how big of a home project or remodeling you can afford.