Familiarize yourself with your credit history. Your credit reports carry the most weight for lenders making a loan decision. In the U.S., you are entitled to one free credit report each year, which can be accessed through https://annualcreditreport.com. Credit reports can also be paid for through the three credit bureaus or through a third party business.
"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of Truist Financial Corporation: SunTrust Bank now Truist Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRALink opens a new window and SIPCLink opens a new window, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.
Before you start shopping around for a home improvement loan, put your project into perspective. A $55,000 master bathroom makeover might make sense in a neighborhood where home values are high, but installing a Jacuzzi bathtub and a matching Italian marble floor and countertop of your dreams might not make sense if your home and the rest of the neighborhood is valued at $180,000. Pouring money into renovations can add value to your home, but be careful to ensure your modifications don’t make your home difficult to sell in the future.
Home improvement loans are unsecured, meaning they’re approved based on the borrower’s credit history and income and do not require collateral. They are offered by online lenders, banks, or credit unions and work similarly to personal loans. Once approved, you’ll receive funding through direct deposit or paper check, and then be able to pay for your building supplies and contractors.
For a home equity line of credit, the best place to start is your own bank or credit union. Both usually offer lower rates to depositors. Check other sources to be sure. If you get a second mortgage, refinance, or opt for an FHA 203(k) mortgage, you're better off talking with a mortgage broker. A broker has more loan sources to choose from. When looking for a broker, check with people you know, and check any references you get. Contractors are another source of financing, but be wary: It's hard enough to choose a contractor and a loan when they're separate. And be suspicious of contractors who emphasize the monthly payment instead of the total cost of the job.