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Best loans for small home improvement projects

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Small home improvement projects can do wonders for the comfort and aesthetics of your home. But there’s no denying they can be expensive. That’s where home improvement loans come in. If you don’t have the cash on hand to cover a small home improvement project like a kitchen refresh, entryway makeover, or anything else, a home improvement loan may come in handy. Here’s a closer look at the best loans for small home improvement projects.

Cash-out refinance

With a cash-out refinance, you take out a new mortgage loan with a larger balance than what you currently owe. Then, you repay your current mortgage and pocket the remaining cash, which comes from your home equity (the difference between what you owe on your mortgage and what your home is currently worth). You can use the cash to pay for a home improvement project.

Home equity loan

A home equity loan also involves your home equity. Once you take one out, you’ll receive a lump sum of money upfront. Depending on the lender, you may be able to borrow up to 100% of your equity and can lock in a fixed, low interest rate with terms ranging from five to 30 years. A home equity loan is ideal if you need funds for a one-time, home improvement project.

Home equity line of credit (HELOC)

While a HELOC is similar to a home equity loan, there’s one key difference: it’s a revolving line of credit. You should be able to withdraw money as much or as little as you’d like up to a set credit limit andpay interest on what you borrow. If you’re unsure of exactly how much money you need to cover a home improvement or you’d like easy access to cash, a HELOC is worth considering.

Personal loans

If you don’t have a lot of equity, you might want to consider an unsecured personal loan. Personal loans vary greatly from lender to lender but most of them come with rates that are higher than what you’d get with a home equity loan or HELOC. The benefit, however, is that you won’t have to secure your loan to any collateral and risk the lender seizing your valuable asset in the event of default. Other perks of personal loans include convenient online applications and fast funding.


Credit cards

The fastest and easiest way to fund a small home improvement project is through a credit card. But if your project costs more than a couple hundred or thousand dollars, you may need to ask for a higher credit limit or use multiple cards. If you go the credit card route, look for a card with a 0% APR introductory offer. This way you may be able to repay your home improvement without interest during the promo period, which usually ranges from 12 to 18 months.


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