What Are Your Home Improvement Loan Options?
If you are considering a home improvement project, you will want to know what loan options are available, and have a rough idea on how much you want to spend, and identify what are the best improvements to make with the best return on investment. Here is a basic overview of the home improvement loan options.
Home Construction Loans: these loans require a little bit more upfront disclosure, as there is more risk for the lender, in the event the project doesn’t come to completion. If you are considering a home construction loan, be prepared to provide:
- Proof of solid credit and financial health
- Comprehensive list of the home improvement projects
- An appraisal to determine the home’s value
- 20-25 percent down payment funds
- Choosing a builder who is approved by the lender
Home Equity Line of Credit: with a line of credit, you can make withdrawals as you need them for home improvement projects, over a specific period of time determined by the lender. Much like a credit card, as you pay down the balance, your credit will revolve. Keep in mind, the interest rates may fluctuate and rates may be higher than a fixed-interest rate loan.
Home Equity Loans: with a home equity loan, you will use the equity of your home’s value as collateral. The value of your home will be determined by an appraiser, which will determine the amount of money you will be able to access.
FHA 203(k) Loans: the FHA 203(k) loan is backed by the Federal Government, and act much like its sibling loan product, FHA. These loans still require a 3.5 percent down payment, but you can build in money to make repairs and upgrades at the time of purchase. There are other restrictions that you will need to know about, however, the FHA 203(k) home loan is a great option for the perfect house that needs a little TLC.
For more than forty years, Knipp Contracting has been helping homeowners like you maximize their property values, while creating a beautiful space that you can enjoy for years to come. Our experienced team members are standing by, ready to assist you today. We look forward to hearing from you soon!
*This article should not be relied upon for eligibility of home buyer or loan borrower. Knipp Contracting is not a loan servicing company and should not be relied upon to determine whether or not you qualify for any of the above-mentioned loan products. You should consult a professional, qualified lending institute to learn about your qualifications and any restrictions that may apply.