Do you have a home improvement project that you want to start soon but need to borrow some money to help pay for it?
If you don’t want to delay your project while you apply and wait to be approved for a conventional cash-out refinance mortgage, and you have a good credit profile, there are a couple of good alternatives to consider.
The first would be obtaining a Personal Consumer Loan. A Personal Consumer Loan is an unsecured loan, which means there is no collateral, such as your home, required to obtain the loan. It is mainly based on your “personal” credit profile and income so the process of applying and getting approved is quick and easy. Many consumer lenders now have simple online application processes so if you have good credit and income, you could be approved within a few days. Personal Consumer Loans are short-term loans, typically 2 to 7 years, and the amount of the loan, again based on your credit profile, can be as high as $100,000. The interest rates on Personal Consumer Loans are usually slightly higher than secured loans, but if you need the funds fast and/or are planning to pay off the loan within a couple of years, they’re a good option to consider.
Another alternative to consider would be a Home Equity Line of Credit (HELOC). A HELOC is a line of credit is based upon your home’s equity. It is secured by your property and taken as a second mortgage (in addition to your existing mortgage). The amount of the HELOC is based upon the amount of equity in the property being secured and can be as high as $500,000. Interest rates on HELOCs are variable rates tied to short-term interest rate indexes and change monthly as the index moves. The process of obtaining a HELOC is more involved than obtaining a Personal Consumer Loan as a HELOC loan application and home appraisal are required. The entire process of applying, appraisal and approval usually takes 30 days or less.
One of the biggest advantages of a HELOC is that you can access the funds as you need via check writing, and you only pay interest on the amount being used. Additionally, the interest paid on a HELOC may be tax deductible.