How To Get The Best Home Improvement Loan Rate

A home improvement loan is a loan whose purpose is to to make repairs, expansions, or improvements to your house or real estate. Simply put, the best home improvement loan rate is the one that produces payments that are low enough that you can meet them with no problem. If you’re looking for low rate home equity loans, it makes sense that you shop around for a while. After all, how do you know you’ve secured THE best home improvement loan rate unless you’ve consulted several lenders and have a reasonable amount of offers to choose from?
You can only get that elusive good rate when you finally meet a lender who’s willing to work with you when it comes to interest rates, repayment terms, repayment options, and so on. And the primary factor for finding that kind of accommodating lender is your credit and whether it’s good or not. This is something that you can easily check, since there are a number of companies that can offer you a free credit report (no trial) so you can assess your credit situation.
Of course, every lender you approach will claim that they’re offering you the best home improvement loan rate for your particular situation. In many occasions, people apply for, and get, home improvement loans but they fail to secure the best possible rate because they didn’t bother doing their homework before applying (getting their credit report) and they didn’t do research after applying (doing some comparison shopping to find the best deal).
One are of concern for people shopping for the best home improvement loan rate is that they fear that doing some comparison shopping with several different lenders will impact their credit score negatively. While this was a concern a couple years ago, the credit reporting industry has adapted and now if you make all your inquiries within a set period of time (15 days, according to many sources), they all count as one inquiry.
Being a savvy shopper can help you secure the best interest rate considering your personal factors. Here’s what you should be doing.

1. Order your credit reports so you can analyze your credit history. If you spot mistakes, take the necessary steps to have them corrected
2. Get your credit scores. If you opt to get the free credit reports that you’re entitled to each year, they will not include your credit scores. For a complete picture, you should get your credit scores too
3. Start your research by selecting banks and financial institutions that offer home improvement loans among their financial products
4. Consult with those financial institutions, give them an estimate of your credit score, and hear what they have to say. If you’re told that your credit score is too low to secure a good home improvement loan rate, ask for advice on how to improve your credit score
5. Make visits to the lenders’ offices and ask to to talk to a loan officer. Ask about how to get pre-qualified for a home improvement loan
6. Don’t make any commitments to any particular lender until you’ve gotten at least half a dozen separate quotes, just state that you’re comparison-shopping so you can get the best home improvement loan interest rate and terms that you’re currently eligible for.
7. Do an Internet search to see what the competition has to offer, you’ll find that plenty of additional options are only a few clicks away. Compare to what you get through in-person visits
8. Study the different interest rates and other repayment terms offered by all the competitors
9. Work your budget and thoroughly review it to make sure that you’ll be able to meet the monthly payments from each offer
10. Once you’ve decided on one that suits you best, pay another visit to that loan officer and see if you can sweeten the deal

As a general rule, if you’re able to offer a collateral, your interest rate will be lower. That collateral can be your house or any other asset you own. The reduced interest rate reflects the fact that the lender’s risk is lessened by the fact that he has something to fall back on should you default on your loan. In those cases, the lender will be more likely to be more flexible in setting up your loan, especially if you have good credit. By the way, if you have good credit, you have even more options, as you can opt for an unsecured home improvement loan. In this case though, keep in mind that your interest rate will certainly be higher.
The best home improvement loan rate (as in, the lowest one) in not necessarily the best deal though. It won’t do you a lot of good to get the best interest rate if you’re expected to pay sky-high fees for late payments, or if your repayment terms are unrealistic, or if you have to pay a hefty penalty for paying off the loan in a shorter amount of time. What you’re loking for is the most flexible terms, along with low interest and low fees, with as little penalties as possible.

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