A New View On Home Improvement Loans
The recent phenomenon of upside down mortgages means that, through no fault of their own, many homeowners have little to no equity in their homes and therefore can’t apply for a home improvement loan for needed repairs or updates, but there is a new solution.
That solution is peer to peer lending. Peer to peer lending is a group of investors (lenders) and borrowers who meet on a site and bid on lending or borrowing funds. What happens is that banks and other institutional lenders are eliminated so that the lender can earn more money and the borrower can pay less.
The great thing for many homeowners fenced in by falling housing values is that peer to peer loans do not use the house as collateral for the loan. This offers homeowners a new way to obtain a home improvement loan for required or even just desired changes, such as additions, renovations and other improvements.
Your home is probably your largest investment, and adding to its value with new kitchens or bathrooms will definitely pay off in the long run, even though you can enjoy them today while you are still living in the house. Some home improvements, however, even pay for themselves long before the home is sold and the higher value can be realized: new energy saving devices such as furnaces and hot water heaters, better insulated windows, solar panels and other energy saving solutions all save money as soon as they are installed. With today’s high cost of energy, high efficiency or energy saving measures can save hundreds of dollars in costs each month.
Completing a loan application is as easy as 1, 2, 3. The sites that exist to administer peer to peer loans make the system as simple as possible for both the borrower and the lender. Borrowers follow a three step process of Step 1: Follow the instructions to generate your loan listing; Step 2: Upload the listing; Step 3: Monitor the bidding action between prospective lenders. Business is still business, so your credit rating will continue to have an impact on your loan rate, but lenders are able to accept lower rates since there is no bank in the middle taking a piece of the profit.
There are lenders of all sizes on peer to peer lending sites, but historically, loans in the range of $1,000 to $15,000 are the most desired among bidders. These amounts seem almost perfectly suited for home improvement loans, since an energy efficient washer and dryer would run about $1,000, and an average kitchen remodeling job should cost about $15,000, perfect for the homeowner with these projects in mind.
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