Aspiring homeowners typically secure home loans, so they have sufficient funds to purchase a home. The nature of the mortgage the borrower secures defines the home loan. Lenders—such as banks and credit unions—determine the type of loans the borrower qualifies for by reviewing the borrower’s credit score and other financial information, such as their income and existing loans.

Borrowers can choose between fixed-rate and adjustable-rate mortgages. The interest rate, the nature of the loan’s mortgage rate, and the down payment will determine the monthly payments the borrower must make to repay the loan. Although it may seem that home loans are strictly limited to purchasing properties, some home loans can be used for multiple purposes, which is why it’s essential to understand the nature of the loan you’re pursuing before you choose a lender. Read on to learn about some smart ways you can use your home loan.

1. Purchase Property

The most apparent purpose of a home loan is to purchase a property. Using a home loan interest rate comparison tool will help you find the most favorable loan with the lowest interest rate. The comparison tool identifies reputable lenders, their current interest rates, and the monthly payment amount the homeowner would be required to pay. Home loans are affected by the nature of the purchase. Homeowners typically receive lower interest rates if they’re buying a home they’ll occupy.

2. Electrical and Plumbing

Homeowners can opt to obtain a Federal Housing Administration (FHA) loan in the United States or a home loan with a renovation loan option in Australia. These loans make it possible for homeowners to access funds for renovations. If you opt to purchase a fixer-upper, you may have critical repairs you need to perform to make your home habitable. Prioritize ensuring the electrical and plumbing systems are up to date. Outdated electrical systems can cause house fires. When pipes burst or disintegrate, sewage can back up into your home, causing property damage and making occupants sick.

3. Roof Replacement

Roofs that are damaged or missing shingles can allow precipitation to enter your home. When this happens, moisture builds up inside your property. Over time, support beams, floors, ceilings, and walls can rot. Excessive moisture can damage insulation in your attic. Moisture also allows mold to grow inside your house. Mold can spread and make occupants sick. It’s also expensive to remove from your property. 

Check ceilings for water spots. Discoloration could be a sign of a water leak. You should also do a visual check to ensure shingles aren’t buckling or curling. You can help prevent roof issues by regularly performing regular visual inspections and cleaning out your gutters. Clogged gutters can’t remove precipitation from your roof. Consequently, moisture builds up on the roof and can enter your home.

4. New Windows and Doors

Whether you live in Grand Rapids, Tulsa, or Melbourne, your home may benefit from new windows and doors. Google “Kentwood window companies” to find professional window installers in your area and learn more about your window and door replacement options. Old windows can allow unwanted air exchange, making your home cooler than desirable in the winter and warmer than you’d like in the summer. Your home’s heating, ventilation, and air conditioning (HVAC) system will have to work harder to maintain an optimal temperature. Installing new windows and doors will increase your home’s energy efficiency. This home improvement option pays off because you’ll enjoy lower energy bills and boost your home’s property value at the same time.

5. Heating and Cooling System

Your home’s HVAC system will have a significant impact on your monthly energy bills. Old HVAC units or HVAC units in disrepair will work harder to heat or cool the air, which will cause your bills to rise. You may be able to extend the life of your HVAC unit with regular maintenance, but if you’re buying an older home, you may need to invest in a new system.

HVAC systems aren’t just a threat to your monthly budget. HVAC systems can circulate allergens and toxins throughout your home. Having your unit cleaned biannually, replacing air filters, and cleaning the ducts will improve air quality, reducing the risk of respiratory illnesses.

The most common way to use a home loan is to purchase a property. Homeowners can also use loans to perform crucial repairs and improvements. The smartest upgrades prevent health issues, reduce safety risks, and reduce monthly expenses.