Getting a Home Improvement Loan
Home Improvement Loans are available for
both Home Remodeling projects and Fixer Up Home Purchases
By Mark J. Donovan
Home improvement loans are used
for either financing home improvements to an existing home owned by a
homeowner, or for buying a new home that is in need of home improvement
repairs to get it to a proper occupancy level. Getting a home improvement
loan in today's economy and housing market conditions is tough; however it
is not impossible if you have good credit.
Home Improvement Loans for
Existing Home Ownership
When seeking a home improvement
loan for the purposes of improving an existing home, such as building home
additions, remodeling kitchens, bathrooms, and basements, and even for
improving landscaping there are a number of alternatives for the homebuyer.
They can obtain a home equity loan, refinance the home, or even obtain a
personal loan. All have pros and cons and are dependent on the homeowner’s
unique financial situation as well as the home improvement loan market
Home Improvement Loans for Buying
Getting a home improvement loan for
buying an existing home, such as a fixer-up can be more difficult, however it is
not impossible. For example, the U.S. Department of Housing and Urban
Development (HUD) offers a loan program known as FHA 203(k) that allows a
homebuyer to buy, or refinance a home and include in the proceeds of the home
improvement loan the monies necessary for making the home improvement. The loan
works similar to a home construction loan.
With an FHA 203(k) home improvement
loan the home is appraised for what the value of the home will be worth after it
has been renovated. Assuming the home improvement loan is approved, the FHA
203(k) loan will provide the homebuyer with the funds to buy or refinance the
home; make the renovations to the home, and pay for allowable closing costs.
At the loan closing the home seller
is provided with the funds for the purchase of the home by the homebuyer. The
remaining home improvement loan funds are then put in escrow and used to pay for
the home improvements during the renovation period. As the home improvements are
made, funds from the escrow are released to the home improvement contractor, via
draw requests, for work performed. However, the contractor is only paid 90% of
the draw request to ensure that he completes all of the home improvement work.
|The FHA 203(k) loan is available to
all borrowers and income levels for those homeowners who plan to occupy the
home. This includes multiunit dwellings up to four units. FHA 203(k) home
improvement loan terms are for fixed rate, 30 or 15 year periods, or for one
year adjustable ARMS. They are assumable to qualified buyers with zero percent
So whether you are an existing homeowner looking for a home improvement
loan to remodel a kitchen, or if you are a want-to-be homeowner who is
looking at buying a fixer-up and needs home financing that includes a home
improvement loan component to the financing package there is a solution for
Talk with your local real estate
agents and your banks to see what home improvement loan solution is right for
unique loan requirements.
For help on building a new custom home, see HomeAdditionPlus.com's
Construction Bid Sheet.
New Home Construction Bid Sheet
provides you with the knowledge on how to plan a custom home building project,
and what to look for when hiring contractors for your new home construction. It
also includes a detailed cost breakdown table and spreadsheet for estimating
your own new home construction building costs.
Related Articles on Home Improvement Loans and
Financing a Home Improvement Project
Related New Home Construction Articles
Additional New Home Construction and Home Remodeling Resources
Home Addition Estimates for Free with No Obligation!
Fill out our 3-5 minute quick and easy form, and receive a free Home Addition
Price Quote from one of our prescreened and licensed home addition contractors.
This process is free and there is no obligation to continue once you receive
your home addition estimate.