Home Improvement Loan

By: EconomyWatch Content   Date: 17 December 2009

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A home improvement loan is a great option for people who want to make some critical infrastructural improvements to their home. For instance, one can take a home improvement loan for electrical maintenance or plumbing. One can also opt for a federal home improvement loan offered by the Department of Housing and Urban Development (HUD), provided one’s household incomes ranges from low to medium. Federal home improvement loans are administered through the various state housing administrations with the aim of helping low income individuals renovate their homes.

 

The typical recipients of federal home improvement loans are landlords intending to renovate the home for low income renters and people who want to improve their barns or garages. People who are members of any federally recognized tribe can also qualify for government home improvement loans for Native Americans.

 

Home Improvement Loan: Qualifications

To secure a federal home improvement loan, one has to take care of the following three main qualifications:

  • The home must be such that one to four family members can live in it.

  • The property should have been built for more than a year.
  • The loan amount must not exceed 100% of the growth in the value of the home caused by the improvement.

People who intend to lease their property may also qualify for federal home improvement loans, under certain circumstances. The loan amount must exceed $4,999. Also, the work to be done should be more than just cosmetic repairs. The Department of Housing and Urban Development insures the loan up $25,000 if there are any snags in the improvement.

 

Home Improvement Loan: Purpose Effects

 

The home improvement loans pay for the following:

  • Structural damage
  • Modernization
  • Improving accessibility for the disabled
  • Energy conservation improvement
  • Eliminating health hazards such as toxic paint and asbestos
  • Major landscape work

 

It is worthwhile to note that once the loan is taken, the work it pays for must begin in no more than 30 days time. Interruption in the work, if any, should not exceed 30 days. Six months is the set duration within which the work has to be completed.

 

One may also consider home improvement loans offered by private lenders under Section 203(k). However, the rates on these loans are regulated by the HUD. The federal home improvement loan is considered the best option to finance home renovations, provided all the terms of the agreement are adhered to. This will not only improve the living standard of the borrower but also increase the equity they have in their property.


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