14 Dec Financial Assitance Available for Home Improvements
When looking to do repairs or renovations in any home, money is always a factor. Home improvement loans are provided to those who are looking to fix up their residence, and there are several options out there in regards to these loans.
FHA 203(k) Loans
These loans come directly from the Federal Housing Administration, so their down payments are substantially less (as low as 3.5%) and the owner can use the money for a number of items. You can refinish the bathroom or update the kitchen, finish the attic or basement, and even tear down as long as the original foundation remains intact. The only limits to this loan would be luxury items such as a pool. To qualify for this loan, you have to provide a bid from an approved contractor to make the upgrades as well as the paperwork. An appraiser will review the application, appraises the estimated value after the renovations are completed, and submits the bid. Once it is approved, the renovation is put in escrow and there is a deadline for completion (usually 6 months). Once completed, an inspector verifies the work was done correctly before the money is paid to the contractor.
Fannie Mae Homestyle Loan
This loan is similar to the FHA loan, but it requires more of a down payment. For Fannie Mae, you have to put down at least 5%. It is a small exchange for the return, though, since you have no limits on the type of renovations you can do as long as it is permanently attached to the home and adds value to the property. The application and approval process remains the same as with the FHA loan. Once you have a number in regards to the post-renovation appraisal price, you can borrow up to 50% of the appraisal value for the renovation. You get 12 months to complete the work instead of 6 with the 203(k).
Section 504 Home Repair Program
This is a government program that helps qualified homeowners to improve their homes. This program requires upgrades which make the home safer, more energy efficient, or more accessible to the disabled and elderly. To qualify for this loan, you have to have an annual income less than 50% of the area’s median. The maximum loan amount available for the 504 is $20,000 which can be repaid over 20 years with a 1% interest rate. Once approved, the loan officer comes to review the property to determine which improvements would be covered.