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Mortgage Choice - How to find the best home loan

Kristy Sheppard from Mortgage choice discusses about the importance of finding a home loan most suitable to your financial situation as well as ...

Best home improvement loan: how to find it and pay less for it

 2. Personal loan

These typically have lower interest rates than credit cards, and with fixed interest rates and payments, they make budgeting easier. But those are still higher than the other types of loans explored below. So personal loans may be best if you're borrowing smallish amounts, perhaps $1,000 to $5,000.

If you have a rewards credit card, you might want to put the improvements on it, then repay it with a personal loan at a better rate.

Again, you're likely to get a decision on your application quickly and with little hassle. Meanwhile, the set-up costs are generally low and often free.

If you want to borrow larger sums, the options below almost always come with lower rates. However, expect significant set-up costs and more admin with them. And they are also "secured," meaning you could face foreclosure if you fail to keep up payments.

3. Home equity loan

You borrow a lump sum and pay it back in equal installments over an agreed term. And you will probably get a fixed interest rate. So this is a simple, straightforward and highly predictable loan.

4 ways to get the best mortgage refinance rate

2. Consider a shorter loan term

If you have a 30-year mortgage that you’ve had for several years and refinance into another 30-year loan, you’ll drag out your mortgage debt and interest rate payments over a longer period — unless you sell the house before the end of your term.

You could choose a shorter-term refinance, such as a 15- or 20-year mortgage, and enjoy a lower interest rate.

Throughout 2017, rates on 15-year fixed-rate mortgages have been about 80 basis points (0.8 of 1 percentage point) lower than rates on 30-year fixed-rate loans, according to Bankrate’s weekly survey .

But note that a shorter-term loan will come with a higher monthly payment.

You also might consider refinancing a fixed-rate loan into an adjustable-rate mortgage, or ARM . Those tend to come with lower interest rates, at least during the initial years before the rate starts “adjusting.”

If you think you may be staying in the home for the long haul, an ARM may not be the right choice for you.