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Home Improvement Loans
by Beverly Kane
The best way to increase the value of your home is to make improvements. If you are like
most people, this is nearly impossible to do without the help of a home improvement loan.
These loans are tax deductable for home-owners seeking to make improvements on their
primary residence, not rental properties or vacation homes. A home improvement loan can
be used to a variety of upgrades and renovations including, but not limited to,
remodeling a kitchen or bathroom, installing a swimming pool or even re-carpeting your
home.
Home improvement loans must be secured by collateral, this is equity built up in the
home. Because these types of loans are less risky to company, they are typically offered
at a lower interest rate. To be considered for a home improvement loan, you must own the
home, or be in good standing with your mortgage payments.
There are two kinds of home improvement loans available to choose from. Those loans are,
FHA Title I Home Improvement Loans and the Traditional Home Improvement Loans. Either one
can be used for new construction, remodeling or upgrading things in your home like a
garage, new roof, swimming pool or new bathroom and kitchen, among many other projects.
You must have equity in the home you intend to improve, if you are considering a
Traditional Home Improvement Loan, generally about 20% of the home's cost. The equity
you've already built and that gained by the improvements of the home are to be the
collateral. The company that provides the loan is called a lender. When using a home
improvement loan, the lender will take out a first or second lein or mortgage against
the home.
Though the majority of home improvement loans are for terms or 10 years or less, there
are programs and lenders available that will extend the term to 15 years. That is
largely dependant on how much you intend to borrow. The difference between a Traditional
Home Improvement Loan and a FHA Title I Home Improvement Loan, is that the latter is a
Government program.
You may use the FHA loan for necessary repairs and maintenance to the home. Luxury
upgrades are not allowed. This may be the way to go for many as equity in the home
is not required for this type of loan and past credit issues are often not a problem.
The repayment for the FHA Title I loan can be as long as a 20 year term, as long as the
home-owner has kept their credit in good standing, recently.
If your home loan is under $7,500, there is no lein placed on the title of the home,
making it possible for more home-owners to make improvements on their home, while being
tax deductible at the same time.
Whether you've decided to purchase your first home, or your still in the researching
phase, check to see if your state or local community has programs available for first
time home buyers. Many of these programs will offer you step-by-step assistance in
finding realator, a home and the loan that best suits your needs. They are an invaluable
resource.
Programs for first time home buyers should have a proven track record. Look to see that
they have been in business for a reasonable amount of time. Check with your local financial
institutions for a list of mortgatge companies that are considered reputable.
Next, be sure you meet the criteria to take part in the program you've chosen. Remember,
there are many to choose from and the best are those geared toward assisting low to medium
income families by offering smaller down payments, no down payments, lowered closing costs
and reduced interest rates.
A first time home buyer program should take the hassle out of buying a home, allowing you
the freedom to enjoy the process of selecting your very own home.
About The Author
Beverly Kane is a staff writer at http://homeimprovementgazette.com and is an occasional
contributor to several other websites, including
http://www.theshoppinggazette.com.
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