The equity you've built on your home can help you finance improvements. The equity is the difference between the property's whole value and the remaining debt of your mortgage loan. That proportion of your property's value can be used to secure another loan so you can get finance at very reasonable rates.
Home Improvement Equity Loans
Home improvement equity loans are loans specially tailored to be used for making home improvements. They are similar to home loans only that instead of used for the acquisition of a property, they are destined to improve the property's value by repairing or redoing the property's interiors and exteriors.
Whether you want to do repairs, change or fix floors, add or change carpets or tiles, repaint the outer or inner surface of the house, make roof repairs, add floors, remove or add windows, chimneys or decoration, etc. you can always resort to home improvement equity loans.
How Do They Work?
Home improvement equity loans are secured loans, they are guaranteed with the same property that a home loan. The asset securing the loan has to have enough free equity to cope with all the expenses generated by the improvements you are about to undertake. You could also request a line of credit that provides more flexible finance without having to apply for extra cash again if you run out of it in the middle of the repairing. However, lines of credit usually charge higher interest rates than home improvement equity loans.
Nevertheless, since these are secured loans, the interest rate charged is considerably lower than that of regular personal loans or than using your credit card to buy materials and pay for professional services. Besides, you can agree with the lender shorter or longer repayment programs so the loan installments are affordable enough to suit your budget.
Friday, 25 November 2011
Monday, 21 November 2011
Reinventing the 312 Home Improvement Loan Program
Over the last thirty years the community development field has moved away from its early focus on helping homeowners maintain and improve their properties towards the development of new affordable housing. Fueled by the resources of the Low Income Housing Tax Credit Program (LIHTC) and a confident economy, and in flight from lead remediation requirements for housing rehab, non-profits as well as for profit developers and local governments began to shift towards the promotion of new construction - both rental and homeownership - and away from housing rehab aimed at assisting individual owners.
The time has come to shift back.
Hundreds of thousands of foreclosed properties, declining property values and the loss of home equity, the absence of conventional credit, the need to make older houses energy efficient, opportunities to stimulate the local small construction trades and building supply markets - all of these factors demand that we look again at housing rehabilitation as an important policy option.
We need tools to promote the repair and rehabilitation of our older housing stock. Historically, the federal government played a leadership role in promoting home rehab and we need the Federal government to play this role again. A key role government can play is to authorize a significant amount of funding for the Section 312 Loan Program. We need to revisit this old tool and reinvent it making it relevant to the current situation.
The 312 Loan Program was authorized in the Housing Act of 1964. It provided loans from the Federal government through local municipal governments to home owners and landlords at 3% for a twenty year term. The per unit rehab cost allowed was $27,000, which in the 1970s and 1980s was a significant amount of money. It was used often in Urban Renewal Conservation Areas to assist homeowners in improving their properties and where it had a fairly major impact. It also served as a key component in the Federally Assisted Code Enforcement Program (FACE) to help owners bring their properties into code compliance. And it was the source of financing in the Urban Homesteading Program where vacant properties owned by the Federal government where auctioned off for a dollar.
The 312 Loan Program had some issues. It was cumbersome and time consuming for borrowers. It took a long time to get loans approved and people often deferred work while waiting for approval. People who were savvy enough to use architects, i.e. people of higher incomes, were often the most successful in securing funds. As local governments began to use Community Development Block Grant (CDBG) funds to support housing rehab, 312 became diminished as a tool and fewer funds were allocated to it. While the 312 Loan Program currently exists in the HUD menu of programs, it has no money allocated for it.
The time has come to shift back.
Hundreds of thousands of foreclosed properties, declining property values and the loss of home equity, the absence of conventional credit, the need to make older houses energy efficient, opportunities to stimulate the local small construction trades and building supply markets - all of these factors demand that we look again at housing rehabilitation as an important policy option.
We need tools to promote the repair and rehabilitation of our older housing stock. Historically, the federal government played a leadership role in promoting home rehab and we need the Federal government to play this role again. A key role government can play is to authorize a significant amount of funding for the Section 312 Loan Program. We need to revisit this old tool and reinvent it making it relevant to the current situation.
The 312 Loan Program was authorized in the Housing Act of 1964. It provided loans from the Federal government through local municipal governments to home owners and landlords at 3% for a twenty year term. The per unit rehab cost allowed was $27,000, which in the 1970s and 1980s was a significant amount of money. It was used often in Urban Renewal Conservation Areas to assist homeowners in improving their properties and where it had a fairly major impact. It also served as a key component in the Federally Assisted Code Enforcement Program (FACE) to help owners bring their properties into code compliance. And it was the source of financing in the Urban Homesteading Program where vacant properties owned by the Federal government where auctioned off for a dollar.
The 312 Loan Program had some issues. It was cumbersome and time consuming for borrowers. It took a long time to get loans approved and people often deferred work while waiting for approval. People who were savvy enough to use architects, i.e. people of higher incomes, were often the most successful in securing funds. As local governments began to use Community Development Block Grant (CDBG) funds to support housing rehab, 312 became diminished as a tool and fewer funds were allocated to it. While the 312 Loan Program currently exists in the HUD menu of programs, it has no money allocated for it.
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