The Renovation

A Guide to Home Improvement Loans

There are any number of reasons why someone might need a loan to cover the cost of their home improvements. Some people want to remodel or repair a home that they are currently living in that is getting a bit run down. Other times the house has sustained damage from a storm or natural disaster, and the homeowners don’t have insurance coverage. And in some instances, extra money is needed along with a mortgage to purchase a house that is in poor condition and needs a lot of repair work to make it habitable.

People who would like to renovate and fix up a home they already own have a few alternatives to choose from. You can get a home improvement loan through the US Department of Housing and Urban Development (HUD) which must be applied for through a HUD lender. There are also community based programs such as the Community Development Block Grant Program.

But for those who wish to buy a home that requires a considerable amount of renovation and fixing up, there aren’t a lot of options for financial assistance. This is because many lenders stipulate that the homeowner has to do the renovations before they can take out a loan. The problem is that the renovations can’t begin before the sale goes through, leaving a lot of people wondering what to do.

The answer to this dilemma is to get a 203(k) loan through a certified HUD lender. These loans are specifically designed for people who are in the circumstances mentioned: they want to buy a home that needs a considerable amount of renovation work but they need some financial assistance in order to do so. The 203(k) loan requires the applicant to follow a series of steps that enable them to add the value of the required home improvements to the price of the house. The total cost of purchasing the house and making the needed improvements are all rolled into one loan. This means that the buyer isn’t completely stuck, but can buy the house and get going on the renovations immediately with the proceeds of the home improvement loan.

The first step to getting this type of loan is to put in an offer on a home that you would like to fix up. The sales contract needs to be drawn up stipulating that the purchaser will attempt to get a 203(k) loan to finance both the home and the needed repairs. Once the loan is approved, the new owner of the house will need to set up a plan with the lender regarding completion of the repairs. The deal is conditional on the buyer completing the necessary improvements as agreed upon with the lending agency or HUD.

MY BITTER END – The Renovation

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