Low Income Home Improvement Loan

A low income home improvement loan can actually come in many forms and much of the success of getting a lending agreement will depend on the homework done in finding the right lender for the homeowner's situation. There are actually five ways to secure a low income home improvement loan, and one may apply to the circumstance of the reader. While some paths leading to the desired lending agreement may not fit one's circumstances, an understanding of how the lending system works for a home improvement lending agreement will help in not wasting time with certain sources of money. The five sources of borrowing are: first mortgage, second mortgage, refinances, unsecured lending agreement and grants. For the person in the low income bracket, the most difficult loans to obtain are the first two, but correspondingly, the interest rates on these loans are the lowest.

A first mortgage may be the source of a low income home improvement loan if the borrowing history has been a positive one. If a person seeking a lending agreement has made all but a few of the mortgage payments on time, there may be the possibility of tying a home improvement lending agreement to the existing mortgage. The original mortgager may lend money against the mortgage being carried by that company. If a family has been in a house at least ten years, a good relationship should have been established and could be the basis of a lending agreement. But it should also be noted that if during that ten years a number of late payments with other credit accounts were made, or the debt to income ratio has risen dramatically, the chance to get this kind of lending agreement may be nil.

The second source for a low income home improvement loan may be a home equity line of credit, also known in mortgage circles as a HELOC. This type of lending agreement is a loan against the equity already built into the original mortgage lending agreement. Over the years as mortgage payments are made, more and more of the mortgage principle is pared down and less and less of the house is actually owned by the mortgager. It is that equity that is the basis for a HELOC, which can actually be used for anything, but for the purposes here will be used for improvements on the residential structure. This kind of borrowed money is offered at banks, credit unions and lending companies with banks and credit unions offering the lowest interest rates. A HELOC is a good lending agreement because the interest on the loan can be deducted in most cases from taxes. But the potential borrower should be aware that a bank will only accept borrowers with a credit score at about 640 and above and a low debt to income ratio.

The third source for a low income home improvement loan may be in the form of a mortgage refinance. As said earlier, long years of paying on a mortgage will have produced equity in the house. If a house owner refinances the residence for the original or near the original price, the equity can be taken out and used for something like a home improvement. The downside to this approach is twofold. First, the refinance means that basically a homeowner is stating over again, and the house is suddenly no closer to being paid for that when first purchased. Secondly, this lending agreement may not be available if over the years since the original mortgage was taken out there have been late payments, defaults or other credit issues.

If there is no equity in the house an unsecured lending agreement offered by a loan company may be the answer. In this scenario, a much higher rate of interest lending agreement may be secured through a lending company that does most of its business with those who have lower credit scores or higher debt to income ratios. This type of lending agreement is called unsecured because there is no collateral to help secure the borrowing agreement. If there is not a fairly new car in the family with a clear title, or high quality jewelry or stocks and bonds or an attachable pension or retirement plan, a lending agreement may be made with just the signature of the borrower. But because there is no collateral, the price of the low income home improvement loan has suddenly gotten much more expensive. Higher interest rates mean much higher monthly payments to repay the loan and may douse the enthusiasm for a low income home improvement loan. "This is my commandment, the ye love one another as I have loved you." (John 15:12)

There is a final resource for a low income home improvement loan and may be a grant or loan through the federal government. The Department of Housing and Urban Development offers a number of low income and low interest loans and a few grants that do not have to be repaid and these grants and loans must be applied for through local housing authorities and each one is defined for a very specific part of the low income housing market. For information on these available funds, a person can visit the HUD website to find the particulars. If the reader is a Christian, remember that we have the God of the Universe on our side. The One who spoke matter into being can provide the funds for a second bathroom or a new roof or an additional bedroom for grandma. Don't rush Him, for God has His own timetable in such things. Remember that He may not come when you call Him, but He's right there on time!

Add to: File Insurance Business article Teen Photo Images