Home Improvement
Loan
There are thousands of
products available for home improvements. Home
improvements can include anything from upgrades like
replacing carpet to major renovations like adding a room
or garage to your home. All home improvements have one
thing in common - you will be borrowing money to improve
the quality and appeal of your home. In almost all cases
this means you will also be increasing the home's
value.
Products available for home
improvment vary widely. You may do an Home Equity/Line of Credit, a closed-end
2nd Mortgage , an
after-value loan, a first mortgage, or a host of other
equity products. What you want to accomplish, how long
it will take, how much equity you currently have
available and how much you can afford are among the most
important considerations when choosing a loan
product.
While trying to accomodate
what you want to do, you must also be aware of what you
qualify to do. The guidelines for these products are
"lender specific." This means that there are literally
thousands of lenders to help you with your project, but
each will have their own list of qualifications. All
lenders will be looking at your credit, income,
property, assets and the improvements you plan to
make.
It is
absolutely critical that you not begin your project
before you obtain financing. It is nearly impossible to
find financing once you've torn down walls, stripped
floors or dug holes (just to name a few starting
points). Explore several different lending solutions and
make sure you have a long term plan for when your
project is complete.
The
purpose of the home improvement loan
The home
improvement loan is designed for exactly that – to make
improvements to the home. This can mean a wide range of
things. Some examples of projects completed with the
money obtained from a home improvement loan
include:
• Adding or
enlarging a room
• Building a deck
• Enclosing a
patio
• Funding a swimming pool
• General
repairs
• Repainting and redecorating
• Updating
plumbing
The home financing
situation
The interest rate, total loan amount and
length of loan life are going to be dependent upon the
lending institution and the current real estate market.
They will also depend upon the details of the first
mortgage, the exact purpose of the home improvement
loan, borrower credit history and the value of the home.
In general, the home improvement loan is a short-term
loan which requires only interest-only payments during
the period of home construction. The interest rates are
usually lower than those of a private loan such as a
line of credit but vary according to all of the above
factors.
Using the home to profit from the home
The home improvement loan uses the home as
equity for financing of the loan. With proper repayment
of the home improvement loan, it is actually possible to
profit off of the loan. This works when the value of the
home improvement in terms of the rental or real estate
market brings in more money than the total cost of the
loan to the borrower. Because real estate market values
frequently rise, this is often the case with a good home
improvement
loan.
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Opportunity (c)
Copyright 2006 #1 American Financial
(1AmericanFinancial.com)