When you’re applying for almost any type of home improvement loan you’re eventually faced with the question of whether the loan will be a fixed rate loan or whether the interest rate charged will be variable.  The difference between the two types of loans could save you hundreds, if not thousands, of dollars over the life of your home improvement loan.

Let’s first talk about how a typical home improvement loan from a bank or lending institution works.  Let’s say you borrow $10,000 to build a new deck on your home.  You pay back the loan over time, but you also pay a little extra money, called interest, that is agreed upon when the loan is signed.  This interest is essentially the profit that the bank makes for loaning the money to you.  If you borrow $10,000 and agree to pay it back over 5 years (plus interest) then at the end of those five years you may actually have paid $13,000 or more.  Sometimes the rate of interest through the life of the loan stays the same, but sometimes that rate goes up or down and can dramatically affect your monthly payment.

Fixed Rate Home Improvement Loans: When interest rates are low it’s often smart to go with a fixed rate loan because the chances of the rate going up are greater than the changes of them going down.  Lower interest rates mean you can borrow more money and pay less interest, which is obviously a good thing for consumers who want a cheap home improvement loan.  Fixed rate home improvement loans are usually designed so that every monthly payment is exactly the same through the life of the loan.  This is good because it means there won’t be any surprises.  The rate you can get on a fixed rate home improvement loan is often based on your past credit history, whether it’s a secured or unsecured loan and the amount of the loan and payment length.

Variable Rate Home Improvement Loans: Some home improvement loans can have a variable rate of interest which means the interest rate of the loan changes as interest rates in the market place go up and down.  Banks generally like variable interest rate loans because there’s always the chance that interest rates will go up, increasing their profits and your payments on the loan.  So why would you choose a variable rate loan at all?  Banks will often offer a slightly lower rate to entice customers to use them.  Variable rate home improvement loans are often still good loans and can be great ways to fix up your home.  Sometimes a variable rate loan will actually cost much less than a fixed rate loan if the interest rates go down over the life of the loan.

While different home improvement loans offer different payment terms you can sometimes even refinance a home improvement loan if you find the payment terms to be not to your liking.  Whether you get a fixed rate or variable rate home improvement loan is a completely personal choice that depends upon the market conditions of tha time, your individual loan needs and your personal credit history.

If you’re planning a big home improvement in the next couple of months, then one of the best gifts you can ask for from friends and family is a gift card to help you finance your home improvement! Big stores like Lowe’s hardware stores and Home Depot hardware stores offer all sorts of custom gift cards for just about any amount imaginable.

Home improvement financing with gift cards is a great way to give friends and family a chance to help you with your home improvements, whether it’s a much-needed home repair or simply a house upgrade you’ve been planning and saving a long time for.

Giving gift cards for home improvement projects is becoming common practice when people buy a new home or have a house warming party. Holidays and birthdays are close behind in reasons people buy gift cards to home improvement stores, but the reasons are really unlimited. As housing equity falls and people are stuck in the middle of home improvements without any way to pay for them, it makes sense to ask for gift cards that can help.

Obviously gift cards to places like Lowe’s hardware stores and The Home Depot are only good at those stores, but even if you give someone a gift card to one store they can easily be traded and exchanged for gift cards to other places for the same amount at numerous other places.

I’ve seen entire home improvement projects financed with gift cards from hardware stores. I know a woman who moved into a new home with a bathroom that was in terrible need of an upgrade. She had a house warming party and she purposely asked that people bring gift cards to the Lowe’s hardware store instead of bring bottles of wine or candles or anything else. She used all her gift cards and combined with the discounts she received from applying for a Lowe’s credit card she financed her bathroom upgrade and completely paid off the entire home improvements in just two months!

The best part of about using gift cards to help you with home improvement financing is that you can use the money for materials, labor, home improvement books or just about anything else those large hardware stores sell.

This means that you can not only use gift cards as part of your home improvement financing plan, but also as a way to buy new home improvement tools and materials. If you’re going to save some money on your home improvements then you’re probably going to plan to do it yourself and you probably don’t want your Aunt Bertha going out and picking a table saw for you. If she gives you a home improvement gift card, though, you can pick out exactly the saw you want without worrying about her picking the wrong model.

Financing a home improvement with gift cards is clearly another great way to help someone, or have others help you, easily pay for a home improvement

The last few weeks have been rough on banks, financial lending institutions and other companies which typically loan out money to homeowners for all sorts of loans, including loans that can be used for home improvement. The economic downturn has crushed the housing market and, by extension, the home improvement industry and markets as well.

The simple fact is that many people lost a lot of their home equity with the collapse of the housing bubble and now many larger banks are stuck in a cycle of distrust when it comes to lending money to consumers and even each other.  This means that if you need financing for a home improvement project or you need to borrow money to fix something in your house you may find that traditional big name mortgage and equity companies as well as national banks may not be able or willing to work with you.

There is hope, however.  There are still some ways you can borrow the money you need to improve or add to your home without having to worry too much about the economic crisis that is hitting many institutions across the country.

Local Banks

Many of the national banks have been hit hard because they either directly or indirectly invested in subprime lending products which are now evaporating in value.  Many small local banks avoid investing in risky enterprises and therefore are still doing very well.  Local banks are more willing to help customers with home improvement loans because it’s helping community members improve the neighborhood and overall community, which leads to more people staying near the bank and using its services in the future.

Home Improvement Store Credit Cards

Big box hardware stores are suffering and need people to buy their products and keep their stores in business.  One way they can sell more items is to offer competitive rates on their credit cards to keep people coming into their stores.  Because these cards can often only be used at the stores that issued them these cards basically ensure that the hardware store will do well. Some hardware store credit cards like The Home Depot credit card even has a 0% interest rate for a limited time, so they are definitely worth looking into.

Financing Through Construction Contractors

When the number of home improvements are down due to a slow economy some of the people who suffer the most are the people who make a living working and improving homes.  Roofers, electricians, plumbers and even landscapers are all reporting lower sales.  Many of these contractors and self-employed workers will gladly offer payment plans to you for their services.  They would rather be paid a little bit over each month and get the job of working on your home than risk not getting any work at all because no one can afford their services outright.  Each contractor is different, obviously, but you’d be amazed at how flexible some home improvement professionals can be when it comes to payment.

Bartering

There are actually a lot of private individuals and even companies who are turning to bartering more and more as a way making a living and stay viable. For smaller jobs bartering services or even products can be a great way to have someone repair your home without actually spending any money. I have an elderly lady who essentially bartered here way into having a contractor replace all the windows in her home over the course of a year or so. She worked out a system where she would prepare meals for her contractor neighbor three times a week and in exchange he would do minor repairs around her home and keep and eye out for any materials he might find being thrown away. Sure enough he was working on a job where the wrong windows were ordered and they were put aside to be destroyed (for large jobs it’s often not worth sending things back). He was able to talk to the owner of the project who agreed to give him the windows. Several weekends later he installed them in the elderly neighbor’s house much to her surprise.

Just because the economy is taking a downturn doesn’t mean you can’t still improve your house and live in the home of your dreams. You need to think a little more creatively and outside the box, but you can definitely find some great ways to afford those home improvements even if we are in an economic recession.

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.

Needed Repair or Luxury Home Improvement

There are a lot of different reasons for why you might need to borrow money to improve your home, but generally those reasons fall into the “need” or “want” categories. If your furnace needs to be replaced in the middle of winter that’s a need-based home improvement and in some cases a lender or home improvement contractor may actually be required by law to work with you in order to get your home safe for occupancy again.

If, however, you want to borrow money to put in a new pool or upgrade your home with more energy-efficient windows and doors then that is a “want-based” or luxury home improvement which you don’t necessarily need to live safely and comfortably in your home. Likewise, if you are trying to sell your home but know that you need to replace the flooring and roof in order to attract more potential buyers that is still a “want-based” home improvement.

Determining the reason you want to improve your home is almost as important as determining how you will finance your improvement. When you need to repair something you often need to place more emphasis on a fast approval process or simply being able to get the money in a timely manner. When you have more time to plan out your project then you can often shop around for the best deal and really weigh the pros and cons of each type of financial option you’re offered.

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 Loan

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 Loan

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.

Home ownership is one of the great American dreams, but paying for that home is often difficult when things go wrong and your credit rating is damaged through no fault of your own. It’s difficult to qualify for a home loan when you have bad credit. The good news is that even with bad credit you can often get that desperately needed home improvement financing!

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