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Home Improvement Loans - What Are Your Options

Wed 23 May 2007 - 08:40

Home Improvement Loans - What Are Your Options
By C.L. Haehl

Looking for a home improvement loan, but don't know your options? Most homeowners assume a home equity loan in the only way to finance upgrades or additions to their property. In fact, there are a number of different types of loans available to you, depending on your remodeling projects. And all of these loan programs work in partnership with traditional lending companies.

Loans To Improve A Home's Energy Efficiency

The government wants to help you save 10% to 50% on your utility bills with upgrades to windows, heating and cooling units, insulation, and other energy efficiency improvements. To encourage energy savings, the federal government has backed a number of loan programs with below market rates and favorable terms.

For example, the FHA Energy Efficient Mortgage allows you to finance up to 5% (capped at $8000) of your property's value without having to requalify for a loan. Fannie Mae also offers $15,000 financing at below market rates with their Residential Energy Efficient Improvement Loan.

Loans For General Home Improvements

HUD provides home improvement loans that require a minimum of $5000 in major repairs and upgrades to a property. These loans are called 203k loans. And you can borrow up to the projected value of your home after repairs have been completed, since the government essentially guarantees the loan for lending companies.

Veterans can also find refinancing help through the VA and state agencies. However, these loans cannot exceed the 90% appraised value of the property.

Home Improvement Loans With Flexibility

Government loan programs have a lot of restrictions. So if you are looking for more flexibility in how you choose a contractor, how soon you complete the work, or what type of improvements you choose to make, then look for a home equity loan or cash out refi.

Taking out a second mortgage, also called a home equity loan, makes the best sense if your first mortgage has low rates. Otherwise, refinancing your first mortgage while cashing out part of your equity will give you the lowest rates on financing your home improvement projects.

Keep in mind that no matter what type of loan program you choose, you should request loan estimates from multiple lenders to find the cheapest loan.

Recommended
Online Home Equity
Lenders - We maintain a list of low rate mortgage lenders and update
the list frequently. Try applying with one of our recommended lenders
first.


Bad Credit Mortgage Loans- Rules for Success- Read this article to learn some tips on getting approved for
a mortgage loan with bad credit.

Article Source: http://EzineArticles.com/?expert=C.L._Haehl
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