provement loans because they were created to help
us make improvements on our homes that we couldn’t otherwise
afford. These loans can be used for things like adding an extra
room, putting in a pool for our family in the summer, re-doing a
kitchen or bathroom, or even replacing old carpet with new.
These are secured loans, which means that collateral is
required which is usually based on the current equity in the
home. In order to qualify for tax deductions, the improvements
must be on the your primary residence, not on second homes,
rental or vacation property.
Interest rates on your home improvement loan is usually lower
than other secured loans since it is deemed as less risky and
tends to improve the borrower’s home. You must own your home or
be financing your home to be qualified for a home improvement
loan.
These loans are intended to help you the borrower add
additional features to your home. The most popular home
improvement is kitchen and bathroom remodeling, however other
things such as installation of a new roof, adding a garage, or
installing a pool are other frequently done improvements. The
two most common types of home improvement loans available are;
FHA Title I Home Improvement Loans and Traditional Home
Improvement Loans
With both, you must either own or be in the process of buying
the home since it’s going to be used as collateral for the
loan. When going for the Traditional loan you must have
considerable equity in your home, usually upwards 20%. Your
current equity in the home, as well as that created by the
improvements, is your collateral. The lender then secures the
loan taking a first or second lien.
Usually, home improvement loans are allocated for ten years or
less, however some lenders may have programs that will allow
for up to 15 years, depending on how much money is borrowed.
Just like mortgages, interest paid on your loan is tax
deductible. The Interest rate on home improvement loans is
frequently considerably lower than personal loans because
lenders consider those very risky.
An FHA Title I Loan is a U.S. Government program that helps you
improve or rehabilitate your home much like a conventional home
improvement loan.
This program is obtainable through various lenders, commonly
banks. Some types of luxury improvements such as swimming pools
and barbecue pits aren’t allowed under this loan. With Title I
loans, you aren’t required to have any equity in your home for
collateral. The loan period can be up to 20 years and you can
have some past credit problems, providing you’ve shown recent
acceptable credit.
On loan requests below $7,500, the lender will not take a lien
on the home. The requirements are less severe than conventional
home improvement loans and make it easier for a greater number
of home owners to partake. As an added bonus, the interest paid
is tax deductible.
About The Author: Greg Hansward continually pens newsletters on
themes related to router accessories and router jigs. Writing
for writings (e.g.
http://www.insidewoodworking.com/rout/routertabl.html on router
tables ) he expressed his know-how on the subject.
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