The key to finding a home improvement lender who matches the needs of the borrower begins with understanding home improvement loans in the first place. When a homeowner wants to make improvements, upgrades or essential repairs it is not likely that they can pay for this out of their pocket. This is the opportunity to seek out a home improvement lender.
To begin with, home improvement lenders can make many loan or credit lines available. The borrower must first know what they need. For example, will the improvement work be an ongoing process extending over six or more months? Will there be several vendors, suppliers or contractors to be paid for the work? Will the work be done by licensed professionals and up to all local building codes? Does the borrower want the total loan in a single lump sum, in increments, or in a line of credit?
Having a solid plan in place prior to consulting a lender is necessary to determine the best home improvement lender. For example a couple who wants to add a room to their home as well as building a small garage will likely not have both jobs going on at the same time, which means they will require delivery of funds over a period of six to twelve months.
This couple visits their home improvement lender and finds they have two options. The first is that the lender can serve as a “dealer” and issue payment to the contractors after all their work has been inspected and approved. Alternatively, the same lender can serve to simply fund the loan and make it available to the borrowers as a line of credit. This means they would be essentially provided a check book to make payments as the work is done. They decide to “sleep on it” and make their choice the following day. Since they are both extremely busy people and cannot afford to take the time to hire separate inspectors to double check the work of the contractors they are going to hire, they decide to have their lender serve as a dealer who issues payment when work is completed to their satisfaction.
This simple illustration shows how important it is to choose the right home improvement lender, and it is a good idea to look in several places before making a choice.