In our last post we discussed the basics of applying for a home improvement loan to finance the project you have in mind. It’s one of the most popular ways, but it isn’t the only method to get the cash you need for the changes you want to make. There are many other options that you can look into if a home improvement loan is not something that is on your list, or if you are having trouble qualifying.
Here are some of the options you have if you find that a home improvement loan is not the best choice for you.
Home Equity Line of Credit: These are one of the most popular options for home improvement loans out there. You open up a specific amount that the lender agrees upon on your home’s equity. You can then use this as a credit card and pay it off in the same manner. As you pay it off, more will become available. Lenders have changing rates which makes it a bit riskier, but it is also more flexible. This is a great option if you have a list of projects you’d like to get done over time, because you only have to apply once, not for each new project.
Home Construction Loans: These loans are meant for new construction as well as major additions to existing homes. They are temporary and are meant to be paid off with refinancing when the work is done. One drawback is that they are are substantially dependent on the builder who is going to be doing the job. If the builder is not approved by the bank, then they will not fund the project. The builder submits an itemized cost of labor and materials for each step of the project and then sends a bill to the bank when that part is complete. The bank pays the contractor directly.
These loans, since they’re harder to get, require a bit more information than any of the other options. You have to establish proof of financial health, great credit, home value (as well as estimated value of the improvement), project details, large down payment and information on the builder.
FHA 203(k) Loans: These are government loans that are used to revitalize older, run-down neighborhoods. These loans allow the purchaser to buy the home and then do the repairs that are needed to get the home back in working order. The down payment is low, and the reward is high.
Home Equity Loans: This is a loan that is taken in the amount of equity that the buyer has in the home. This can be done through the bank, but it is much like purchasing the home over again. The homeowner would have to have an appraisal, pay closing costs, fees and other loan-related costs. It’s also often referred to as a second mortgage.
So you see, there are a number of financing options available. In addition to the ones we have listed, there may be grants and zero-interest loans by local entities. The Minnesota Home Ownership Center is a great resource to check out. Or you may qualify for one of our financing programs.
If there are further questions, if you want an experienced, licensed home remodeling contractor in Minnesota or you just want to speak with us about financing options we have, give us a call here at Window Outfitters. We would be more than happy to help!
Window Outfitters is a premier Window Replacement, doors, siding contractor and installer. As Contractor in the St Paul, Minneapolis, (Twin Cities) Minnesota (MN) metro, we proudly serve, but are not limited to, the following areas: Minneapolis Energy Efficient Vinyl Windows, Replacement Window Contractors Minnesota, Burnsville, Apple Valley, Lakeville, Savage, Bloomington, Edina, Richfield, Eagan, St Paul, Hastings, Minnetonka, Plymouth, Maple Grove, Eden Prairie, Farmington MN, Chaska, Shakopee, Chanhassen, Victoria, Mendota Heights Anderson Windows Minneapolis, Marvin Windows Minneapolis.
