Home Improvement Loan? Construction Loan? (heloc, credit, rate, financing)

[TriMT7]

This past year I bought an older house in a short sale for 265k... loan balance is approximately 260K. It's a great house in a historic area.... BUT, I desperately need to replace the siding (I want to do hardiplank), and all the windows to hurricane impact glass. I figure I will need to come up with about 30k in financing for everything. What sort of loan should I look into getting?

The market around here isn't going up, so home equity isn't the way to go (though I would venture I have maybe 50k in equity).... doing the improvements WOULD improve the equity though, and make my insurance rates go down.


What sort of loan is best? Is it easier to get a home improvement loan in this market and with these lending restrictions? Household income = 120k, current mortgage (with P&I) will be 2100/month next year. Are home improvement loans 30 year committments? 20 year? Any insight?

Thanks!

[chet everett]

As recently as this summer basically every lender had miserable terms on traditional "home improvement loans" and MUCH better fixed Home Equity Loans or HELOC. I am pretty sure that is still true.
The way it was explained to me is that even though tradtional home improvement loans are securitized (they place a lien against your title for the length of a loan) there are no broad national standards so there is not an extensive secondary market. Without a secondary market lenders are 'stuck' with loans and have to build a ridiculous amount of overhead into the loans. Yuck!

There are also FHA Title I loans that are 'guaranteed' by the Federal Housing Administration, so the lender is not 'naked' but the limits are like $25,000 and that ain't much...

Construction loans are an altogether different beast, as the big lenders do have systems set for direct-to-construction firm draws as various completion landmarks are reached. Then the lender converts the thing to a traditional mortgage. Sounds great, but because it is NOT available if you already have mortgage it is NOT an option for improvement/remodeling... (not sure what the re-fi rules are, but somehow I don't think a one-year old mortgage is gonna cut it, especially now)

I had some feelers out to Credit Unions, as they tend to have a bit more experience with both plain old home improvement loans and FHA Title I , put ultimately I decided the only intrest rate option that made sense was a HELOC, and it was not what I wanted to have hanging over my head, so I scrubbed my plans for now...

Since you sound like you NEED to make some repairs I would probably concentrate on a Home Equity loan -- the lenders are still making 'em for people with good credit and the rates are most tolerable...

You might find a Credit Union that can do a traditional Home Improvement loan for about the same rate, but don't count on it.

Rare, but a possibility, are the "locally administered" type community loans that MIGHT be available in a historic district -- generally state, county of municipal. And generally pretty small, but maybe in conjunction with a FHA Title I...

[TriMT7]

Thanks for the suggestions. I'm just scared that lenders will be afraid to write equity loans on a home that I will have owned for maybe a year in a market that is still falling. I'll check out the alternative sources you quoted as well.