Owning a home is one of the most significant achievements in the lives of individuals. However, like any other asset, homes need to be repaired or upgraded so that they can maintain their elegance or increase resale value. However, home repair expenses can add up quickly and leave you experiencing significant cash deficits. Upfront cash is always the best option for any person who wants to upgrade their homes, but this is not possible for many families. Sometimes loans become the only feasible option for you to repair your homes. Here are some few loan options that you can consider for home repairs.
Home Equity Loans
Home equity loans are some of the most used options for individuals who want to repair their homes. This type of loan is available at a fixed interest rate. This means that the lender will not be obligated to increase the rates in case of changes in economic factors such as an increase in inflation. You will be required to pay back this type of loan in fixed installments, which is similar to personal installment loans, for a defined period which can either be short or long depending on the agreement.
FHA Title 1 Loan
This is a type of a loan that is specifically designed for home improvement and nothing else. If a home equity program is not an option for you, you can consider taking FHA Title 1 loan. Borrowers have the option of accessing up to $25, 000 but are required to follow particular guidelines when using this loan. Individuals who want to improve functionality or livability of their homes such as adding a bedroom can get this loan, but you cannot get this loan for luxury updates such as swimming pool.
Section 504 Home Repair Program
Sometimes life can be very challenging to the extent that you can’t access credit from many lenders out there. If you are in such a situation, section 504 home repair program has purposely been made for you. This loan is available to low-income families that get under 50% of the region’s median income. This home improvement program is available up to $20, 000 and borrowers can take up to 20 years to repay the total amount borrowed. The advantage of section 504 home repair program is that repayment interest is 1% fixed.
Sometimes you may not want to use home equity loans to repair your home, and it also happens that you don’t qualify for government home improvement programs. You can consider applying for personal loans that are provided by mainstream banking institutions. Upgrading your home is a positive reflection of your overall growth, and you should go a step further to make sure you get a personal loan and use it for home improvement.
However, personal loans differ from one lending institutions, and you have to shop around to get the best product. Some come with fixed interest rates while others are offered with variable interest rates. The problem is that you must have a good credit score so that you can access personal loans.
Energy Efficient Mortgages
The government has brought another option for homeowners for home remodeling and repairs. This program is focused on ensuring that homeowners use green energy to power their homes. However, the purpose of home energy efficient mortgages is not to help owners acquire installations for sources of energy but to repair existing installations. This loan will assist in improving home installations such as solar panel roofing, furnace dust repairs, and wall insulation. These types of mortgages are geared towards encouraging homeowners to use efficient sources of energy for sustainability purposes.
Using home repair loans is a common strategy for many families in the United States. Nevertheless, loans don’t always offer the best option to home repairs because they increase your financial liability. If you are highly concerned about the cost of home repairs, you can consider investing in a home warranty program.
A home warranty program will take care of your common home repairs and extend its services to other maintenance such as plumbing works, HVAC systems, electrical works, and kitchen repairs. Planning is the only reliable remedy to home repairs rather than struggling and hassling from one lender to another trying to secure home repair loans.