You know you can finance (and re-finance) your home, but many homeowners in a repair pinch often wonder: can you finance home repairs?
The answer isn’t quite so simple. According to the Millennial Housing Commission created by Congress, few lenders are willing to administer home improvement loans. Most prefer to make home-equity loans or unsecured consumer loans because they are easier to manage.
Home improvement loans usually require inspections and irregular draws on the loan amount as work is completed, which forces regional or national lenders to find local partners to provide oversight.
Financing repairs and improvements with home equity is okay for most homeowners, but it’s difficult for many first-time buyers. They have lower incomes, smaller savings, and have made lower down payments on their homes than first-time buyers a decade ago. So they have little equity to borrow against. Unfortunately, it is often lower-cost, older homes purchased by first-time buyers that need the most work.
Unless you have a cash reserve, you will have to shop around for the best borrowing terms. In addition to the options listed above, there are other routes you can take. You can ask relatives for a loan, borrow against your whole life insurance policy, refinance your existing mortgage, get a second mortgage, or contact the government about home improvement programs. As a last resort, you can borrow from a finance agency, which generally tends to charge higher rates.
As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.
Christina Tompkins Wright
Berkshire Hathaway HomeServices Hometown, REALTORS