| For homeowners who need a home improvement | | | | The greater the risk to the lender, the higher the rate |
| loan, a remodeling loan or a rehab loan, they should | | | | on the loan. For instance, a mortgage loan that takes a |
| weigh all of their options first. Home improvement loans | | | | second lien position will have a higher interest rate than |
| and rehab loans are great alternatives for those who | | | | a mortgage loan that is in the first lien position. This is |
| don't have the cash on hand or don't want to tap into | | | | because in the event of default, the first mortgage |
| their reserves. Remodeling loans will vary in terms and | | | | holder gets satisfied first and if there is anything left, |
| rates depending on which type of loan you select for | | | | the second mortgage holder may get paid. The |
| your remodeling project. The lowest cost home | | | | greater the L.T.V. (loan to value) the higher the rate |
| improvement loans are the home improvement loans | | | | because a high L.T.V. means the loan has a greater |
| that are secured with a mortgage. | | | | risk for the lien holder. |
| There are many choices for financing home | | | | Some homeowners may take the time to overhaul |
| remodeling projects. There is the 203K F.H.A. | | | | their finances and combine a debt consolidation loan |
| mortgage loan, a closed end second mortgage, or a | | | | with their home improvement loan. In some instances |
| home equity line of credit while others find it easier and | | | | the savings of the debt consolidation may make the |
| less costly to refinance their first mortgage and include | | | | payments on their remodeling loan. The 203K loan |
| the remodeling project into the new loan. Each type of | | | | above is interesting because value after improvement |
| loan has its advantages and there are no rules that | | | | is considered when the loan is underwritten. Many |
| apply to everyone in every situation. For some, the | | | | times this is the perfect loan for major rehabbing of a |
| choices will be limited due to underwriting restrictions | | | | property. Whatever your situation, the first step is to |
| while others will have a wide variety of types of loans | | | | contact a mortgage expert who has many loan |
| to choose from. | | | | products available. In doing so, they will reduce their |
| The interest rates on all of these loans will vary daily | | | | chances of being force fitted into a bad loan. |
| with the market but mortgage loan pricing is risk driven. | | | | |