Home improvements are usually associated with secured loans. There are however, Unsecured Loans especially designed for home improvements’ purpose that can be easily qualified for, have a fast approval process and no annoying paperwork.
There are many offers on home loans and home equity loans specifically created for using the money for home improvements.
It seems reasonable that if the house will be the beneficiary of the cash, it might as well secure the loan that will provide finance. However, people don’t always want to use their home as collateral because they fear losing their house if anything happens and they can’t continue making the monthly payments.
Risk of Repossession
If the loan is secured with the house, the lender has the legal right of repossession. Thus, there is a real risk of losing the property if an unexpected event turns the loan’s monthly payments into an unbearable burden. Though it may seem an overstatement, the truth is that these situations are more common than people think and late payments, missed payments and bankruptcy are the steps of a path that is very congested these days.
An unsecured loan can be the solution to this dilemma. The lack of collateral defines unsecured loans, so your property will remain safe from the risk of repossession and you’ll be able to get the money you need for home improvements and rest peacefully at the same time.
The interest rate won’t be that higher, it may differ 2 or 3 points. You can choose between fixed or variable interest rates on unsecured loans. Unless you can find a really low variable interest rate, it is advisable to select a fixed rate since market variation won’t affect your monthly payments and once you’ve added the installments to your budget, you won’t have to worry about the loan anymore.
Fast Approval, No Paperwork
The approval process has very few requirements and runs quite smoothly. Unsecured Loans are approved in just a couple of days as opposed to secured loans that can take between a week and a month or even more to be closed.
The paperwork needed for an unsecured loan is also considerably reduced. Thus, you won’t have to fill so many annoying forms and you’ll avoid all the certificates needed for collateral’s review.
Credit Score and History
A good Credit History will certainly contribute to getting approved for an unsecured loan and will guarantee the borrower a low interest rate and higher loan amount. When it comes to unsecured loans, the credit score is an essential factor that will determine many loan terms. Make sure you check your credit report before applying for an unsecured loan and make credit agencies correct any mistakes you may find.
Nevertheless, there are unsecured loans for people with bad credit. The interest rate charged for these loans are higher due to the higher risk involved for the lender. However, if you shop around and request loan quotes you will be able to find interesting offers even if your credit situation is less than perfect.