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Low Interest Home Improvement Loan - What's the Catch?


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TERMINOLOGY

Taking out a low interest home improvement loan is a great way to obtain the funds you need to fix up or renovate your home. However, there are some things you need to be aware of before you sign on the dotted line.

Improvement Cost

If you take out a home improvement loan, the money you borrow for the renovation or repairs may not always be well spent. The changes you make may end up not increasing your home’s value as much as you had expected. Another possible issue is if your loan rate is variable, the rate may rise during the course of loan. The increase in your new monthly payment may cause you to have difficulty repaying the loan.

Tax Ramifications

It is a common misconception that all home improvements are tax deductible. This is not always the case. There is a difference between what is considered a home repair and a home improvement. For example, when you fix a broken window, generally that will not qualify for a tax deduction. The improvement and repair tax qualifications are a bit nebulous, so you should consult with your tax specialist, to determine what qualifies for a deduction.