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The real estate market is still suffering, and so anyone who is thinking about selling and moving up to a better house should think twice about it. Instead, most financial experts recommend improving the home you already own, and you can do this with low cost home improvement loans through peer to peer lending.

The adage that your home is the most important investment you will probably make still holds true, so borrowing money to improve that investment is usually a smart decision, as long as you concentrate on the right kind of home improvements. Certain items, such as a kitchen or bathroom remodeling or a new roof have proven to be excellent home improvement loans , and in the meanwhile you reap the benefits while you live there.

But today's home lending market has made it more difficult to secure the financing for these improvements, since lower real estate values have meant that there is not as much equity in the home to borrow against, and do homeowners have to seek new opportunities. This new opportunity to borrow is the peer to peer loan.

Traditional loans involved a bank or other lending institution that would lend to a homeowner who needs to do some home improvements. Home improvement loans obtained in this manner can be expensive, especially now that the value of the home is lower and there may not be enough equity to use it as collateral.

But where do banks and other lenders get the funds to lend to homeowners in the first place? Depositors supply the banks with the funds to give to borrowers. What if there were some way that those lenders could give the loan directly to the borrower who wants to make some improvements in his home?

People who have some money to invest may consider depositing those funds in a bank, but that kind of investment only yields about 1% today. Banks, however, are still lending to borrowers at rates well in the teens. Where does the difference in these rates go? The banks keep this difference as profit. This is the reason peer to peer financing is gaining credence. Investors can grant home improvement loans to borrowers at rates higher than they would receive on a bank deposit. And borrowers can borrow from these investors at rates that are more advantageous than the banks are charging. Look on ny times

Investors have the added benefit of spreading their risk, since they have the option of lending sums of money in smaller increments to many borrowers. This same kind of advantage accrues to borrowers, who now have many investors bidding for their loans.

Most peer to peer lending is structured as part of an online site that works in a manner that is like Ebay or other auction sites, where buyers and sellers bid on goods. The investors have the option of seeing all of the potential borrowers and picking the one they want to lend to. They can know the purpose of the loan, so if they have a particular interest in financing short term investment, that option is open to them as potential borrowers list this specific purpose to their loans.