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Home Remodeling Loan And Checklist
On one weekend, a Saturday in
particular, I decided to attend a seminar on home remodeling. I Usually
prefer to call it home renovation. It was basically for the elderly
people.
Am not in the elderly bracket but I
decided to attend anyway because I was feeling a bit lonely and wanted to
be occupied. On looking around the room, I saw that most people were in
my age group.
Think it is because they have to
initially meet most of the cost for refinancing the renovation of the
home of their old ones.
This seminar turned out to be good to
me and at the successful end I was convinced it was a good take.
In this seminar, it was revealed that
research so far shows this:
It will probably cost anywhere from $100,000 to $150,000 to do a good
renovation of a spacious home for the elderly. This seems a staggering
amount, until you consider that it would cost them from $3,000 to $5,000
per month if they were to rent a unit in a retirement facility in a
location where they might not 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 to live in
the same location and keep their asset.
The biggest challenge many older
adults face when renovating their homes is how to pay for them. Many are
on fixed incomes with few resources. Their property may have increased in
value, but they are cash-poor.
During this seminar, a flyer was
distributed that provided a telephone number for the city and county
Elderly Affairs Division Rehabilitation Loan Program. Many cities have
similar funds available as a means to assist individuals to stay in their
own homes, rather than move to more costly facilities.
I learned that the loan program was
available to a person or family
requiring home modifications, based on a health or safety need. The home
loan or home equity loan with insurance program required that an
application be submitted with information about the number of persons
living in the household and their combined annual income. This
information was then used to determine the interest rate for the loan.
For example, for combined incomes of less than $41,000 or so, the
interest rate was 2 percent; for less than $52,000, 4 percent; and so on.
Another thing I learned is that you
can also have an option, which is that of a reverse mortgage. A reverse
mortgage is a special type of home loan or home equity loan with
insurance that lets a homeowner convert a portion of the equity in his or
her own home into cash. The equity built up over years of home mortgage
payments can be paid to the owner, but unlike traditional home equity
loans or second mortgages, no repayment is required until the borrower no
longer uses the home as the principal residence.
Reverse mortgages are available
through different lenders, as well as HUD. There are some property
restrictions, but single-family homes, two-to-four-unit properties,
condominium units, townhouses, and some manufactured homes are eligible.
Generally, the greater the value of the home, 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 is 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 sheer amount you have to
invest or borrow, here is a checklist before you decide on any renovation
project.
Consider the following before you
decide how to finance your home improvement project:
-Talk to lenders about your options.
- Know that lenders are concerned
about income, debts, 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 equity and if the 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 so you're your interest is tax deductible.
-Take out a home equity loan to get
fixed rates and payments.
-Consider a homeowner 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
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About The Author
Get more information on home loan or home equity loan with
insurances and loan consolidation by Lubowa.M.Planet. Visit http://www.softerdreams.org
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This article was posted on December
06, 2006
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