Home remodeling loan and checklist before choosing a home remodeling loan.
One weekend, a particular Saturday, I decided to attend a seminar on home remodeling. I usually prefer to call it a home renovation. It was basically for older people.
I’m not in the senior group, but decided to attend anyway because I was feeling a little lonely and wanted to keep busy. Looking around the room, I saw that most of the people were in my age group.
He thinks it’s because they have to cover most of the cost of refinancing their old home renovation.
This seminar turned out to be good for me and in the end I was convinced that it was a good take.
At this seminar, it was revealed that the research so far shows this:
It probably costs between $100,000 and $150,000 to do a good senior home renovation. This seems like a staggering amount, until you consider that it would cost them $3,000-$5,000 per month if they had to rent a unit at a retirement center in a place where they wouldn’t be as happy. Looking at it from that point of view, in four years or less, they would have spent the money anyway, and at least making home improvements allows them to continue living in the same place and keep their asset.
The biggest challenge many seniors face when renovating their homes is how to pay for it. Many are fixed income with few resources. Your property may have increased in value, but you are short on cash.
During this seminar, a flyer was distributed providing a phone number for the city-county Division of Aging Affairs Rehabilitation Loan Program. Many cities have similar funds available as a means to help people stay in their own homes, instead of moving to more expensive facilities.
I learned that the loan program was available to an individual or family that required home modifications, based on a health or safety need. The home loan program required an application to be submitted with information about the number of people living in the household and their combined annual income. This information was then used to determine the interest rate on the loan. For example, for combined incomes of less than about $41,000, the interest rate was 2 percent; for less than $52,000, 4 percent; etc.
Another thing I learned is that you can also have an option, which is a reverse mortgage. A reverse mortgage is a special type of home loan that allows the homeowner to convert a portion of the equity in their own home into cash. Principal accumulated over years of home mortgage payments can be paid back to the owner, but unlike traditional home equity loans or second mortgages, no payment is required until the borrower no longer uses the home as a residence major.
Reverse mortgages are available through different lenders, as well as HUD. There are some ownership restrictions, but single-family homes, two- to four-unit properties, condominium units, townhomes, and some manufactured homes are eligible. Typically, the higher the home’s value, the older the owners, the lower the interest rates, and the more one can borrow. This is good news right now, with interest rates so low, and it’s an opportunity for your patients who have a higher annual income that disqualifies them from other programs. And if they live in an area of the country where land or home values are traditionally higher, such as Hawaii or New York, it may be the best option available for refinancing.
Given the large amount you have to invest or borrow, here is a checklist before settling on any renovation project.
Consider the following before deciding how to finance your home improvement project:
-Talk to lenders about your options.
– Know that lenders are concerned about income, debt, credit history and property value.
-Consider a secured loan when you want to borrow more money, get a lower interest rate, or reduce taxes.
-Refinance an existing loan if you have enough principal and if rates are two points lower now than when you initially borrowed the money.
-Use a home equity line of credit that is secured by your home to make your interest tax deductible.
-Obtain a home equity loan to get fixed rates and payments.
-Consider a home loan that is secured by your property. Use a value-added loan when the improvement you make will have a substantial impact on the market value of your home.
-Do your research before using contractor financing.
Good luck