Sometimes home improvement customers have funds on hand to pay for home renovation projects out of pocket. Oftentimes, though, a loan is necessary to fill the gap. Using the equity built up in a home may seem like a smart idea. After all, the money is sitting there and is regularly being added to.
Potential Pitfalls for Home Improvement Customers
That said, no contractors that offer financing want to see their customers put their home on the line to get the money for a reno, only to have them lose that home down the road. Unlike many other types of loans, there isn’t just a penalty fee to be paid if a person has trouble making payments. The borrower can actually have their home taken from them.
Even More Risk
Risking one’s home is only the beginning of potential troubles with home equity loans. There are often additional fees associated with this type of loan. The same fees a homeowner has to pay when originally taking out a mortgage often apply to a home equity loan, too. This unexpected hit gets some people into financial trouble.
Home equity loans also usually come in large lump sums. While this might seem appealing to someone looking for customer financing for a home improvement project, the amount may be more than your client actually needs. Even worse, sometimes home values suddenly take a steep drop. This puts homeowners who’ve borrowed against their home in a much trickier situation than they initially imagined.
A Solid Solution
If you’re looking to grow your business with contractor financing options for customers, and you want to spare them the potential pitfalls of home equity loans, HFS Financial can help. With years of experience, we match customers with the right funding for their home improvement projects. As we always say, “You Dream It, We Finance It.” We truly mean it!
Give us a call today and find out how we can keep your customers on a healthy financial path.