California Home Improvement Loans

The housing market has become extremely volatile in recent years, and this has seen both house prices and home sales decrease significantly. The majority of states in the US have seen house prices consistently decline, whereas the California marketplace appears to have become the most competitive. In fact, house prices in California have literally gone through the roof.

The main advantage for most California homeowners is that they have seen the equity in their homes increase sharply, and this has led to many people wanting to improve their homes, whilst increasing its value. The best way to achieve this would be through a home improvement loan, which will allow a homeowner to make both minor and major improvements to their property. This could be used for adding a new room to your home, remodeling a kitchen or bathroom, adding a new roof, swimming pool, etc.

However, the money that you receive from a home improvement loan can be used at your discretion, and therefore you may wish to spend this on items that are not related to your home. Possibly one of the most popular uses for a home improvement loan will be to consolidate a number of other debts, thus allowing an individual to only have one monthly debt payment to worry about, and typically at a far more favorable interest rate.

A home improvement loan is often referred to as a second mortgage, as the applicant is borrowing money against their home. However, much like a first mortgage, if the borrower defaults on their home improvement loan they could potentially lose their home. With property being so expensive in California it is extremely important that homeowners are sure that they can handle the extra payments that this type of borrowing will bring.

Therefore, it is advisable to draw up a plan of how you wish to spend the money and how you are going to repay it before applying for a home improvement loan. You definitely don't want to borrow more than you need or than you can afford to repay. This is why it is important to discuss these issues with your lender prior to signing on the dotted line. This will allow you the opportunity to assess your financial needs and determine what you can really afford to borrow.

Applying for a home improvement loan in California is no different to applying for any other type of loan. Therefore, you will need to pass a credit assessment which is typically calculated via your credit score. The lowest acceptable score for being approved a home improvement loan in California is generally around 600. However, a score of 660 and above will usually see an applicant obtain the most favorable interest rates.

In general you will need to have owned your home for a minimum of 6 months to be approved for a home improvement loan in California, and the lender will need to carry out an appraisal of your property. This is to ensure that your home has increased in value since you took out your first mortgage, thus meaning that there is equity available for the bank to lend against.

A California home improvement loan will generally be approved if the applicant has not had any bankruptcies or foreclosures on any previous homes in the preceding two years. This will prove to a lender that you are able to handle your monthly obligations and are a responsible borrower.

Your income will usually need to be verified in order to ensure that you can handle the additional debt. This will generally consist of your employer confirming your employment and the level of your income. Often, you will be asked to further clarify this in the form of paychecks and bank statements. These are the basic factors you should be aware of if you are looking to apply for a home improvement loan in California.

As mentioned, a home improvement loan can be used for many different purposes, although many Californians have found this an ideal way to increase the value of their property and then sell their home to make a decent profit. We are aware that homes prices in California haven't been affected as badly as other areas of country, and therefore this could be an ideal opportunity to make a sizeable profit by selling your home. However, you can of course simply renovate and improve your home from the proceeds of a home improvement loan, and then enjoy the new additions and benefits.

You should also be aware that home improvement loans have certain benefits, such as tax deductions. Therefore, it is recommended that you speak to a tax expert to see how these tax deductions can benefit you. As previously mentioned, even though this type of borrowing is called a home improvement loan, you are not merely limited to spending the money on your property. The funds can be used to pay for a vacation, a new car, college tuition, or just to pay off a number of old debts. Based on the fact that house prices in California have not been as badly affected as other areas of the country, this will typically mean that homeowners have more available equity in their homes, and therefore are far more likely to be approved for a home improvement loan.