Home improvement loans are home loans used to finance improvements on your house or property. These improvements can include repairs, a new bathroom, a new kitchen, any extensions or simply general improvements. Interestingly, these loans were also the original home-equity loans before they grew into a limitless line of credit. The theory is that any improvements made on the house will increase its value and enable you to pay back the loan.

The key questions to ask when evaluating such a loan is:

1. Are the improvements you plan to make increasing the value of the home to a greater degree than the loan amount?
2. What will the monthly payments be and are they affordable given the existing mortgage?
3. What are the tax implications and are there any potential tax deductions available?

It is important to get quotes from contracts before approaching lenders as well since they will require this information. It is also important to estimate the value from these improvements in order to assure the lender that you’ll be able to pay back the loan. The loans themselves come from five main sources:

1. First Mortgage
2. Second Mortgage
3. Refinancing Solutions
4. Unsecured Loans
5. Grants

In the end, home improvement loans can be a great way to leverage your house in order to increase value in the same way that a stock investor can borrow money to invest in stocks in order to increase his/her return. This can pay off in the long term as long as your are sure that the value will be realized.