How to Fully Utilize a Home Improvement Loan

An investment in your home is an investment for the future. Simple changes, such as the installation of a solar panel, will save you money. The only problem is, home improvement projects are costly and time-consuming. Most people opt to either start saving for a renovation project or applying for home improvement loan from the bank.

To qualify for home improvements loans, you need to have an excellent credit score rating. You also need to prove to the bank that you can repay the loan on time. Here is a brief checklist to help you fully utilize the home improvement loan and help yourself budget your finances to pay back the loan.

Return on Investment (ROI)

You will be required to repay the loan within a given period. Therefore, you need to make sure your budget reflects your project.  Think about the longevity and cost of an item, and have backup ideas for them should your budget start to get tight.  You really want to make sure that your improvements are going to last well beyond the last payment on your loan, or the renovation won’t be worth it.

For instance, the cost of installing solar panel might be $10,000 or more depending on the size of your home, the panel and the installation company. However, once the panels are operational, they will eliminate your energy bills and possibly be a source of income if you sell back the excess energy to the power company. This means you can make money off your solar panel and increase the total value of your home.

If a renovation project does not give you substantial benefits in the short-run and long-run, then you should consider other financing options.

Total Cost of Improvements

By now, you already have a list of improvements that you would want done on your home. Go the extra mile and calculate the cost of each improvement project, so you how much money each improvement is going to cost. Shop around for quotes from multiple contractors. You want to pick the best contractor who can do the repairs on time, produce high quality work, and won’t charge you an arm and a leg.

Investment vs. Quality of Life

Weight the pros and cons of each project, and set them side-by-side for comparison.  While you are creating the list, try to number each item in both categories to generate their weight in your personal life.  A new kitchen could be a 5 in terms of its use and a 5 in cost, where as replacing that broken toilet could also be a 5 in use but only a 3 in cost.  In other words, both are extremely important to have in life, but the toilet cost less.  Might want to start with the throne if your kitchen can make it through to the next round.  

Can I Do It, or Should I Let the Pros?

Ultimately, some of the renovations will be more involved and time-consuming than others. There are some projects that you can tackle yourself, but other will need the specialized skills and expertise of a professional contractor. Break down all the processes and group them based on the resources that will be required. This analysis and categorization will help you to know if the DIY project you were planning to do has the potential of going wrong and resulting in additional expenses. You don’t want to be forced to hire a contractor if you don’t have to.

To be on the safe side, you should leave the entire home improvement project to a team of experts who have the necessary academic qualifications, hands-on skills, and equipment. Otherwise, you might end up applying for another loan to supplement the first one thereby risking your financial stability.   

Rank All the Improvements

Rank all the improvements you want to be done in your home based on:

  • Cost
  • Return on investment
  • Quality of life
  • Amount of time required

More importantly, determine the order in which the various procedures will be done to come up with an accurate work plan. Work with your contractor to ensure that you didn’t underestimate any of the processes, so you don’t unwillingly sink the ship.


Getting home improvement loans is a great way to supplement your home improvement projects without having to worry where the funds will come from.  These tips and tricks are also great items to include in your budgeting plan, and they will help the bank see you are serious about your project and not just excited about an idea.  

Having an intricate understanding of your costs and the time needed to complete your improvements is a must if you want to walk away from the finished product with a smile on your face.

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