Home Benefits/Eligibility Credit Line/Equity Loan Common Problems HUD Loans
				HUD Home Improvement Loans The Federal Housing Administration (FHA) has a program intended to resolve the problem of getting folks into fixer-upper homes or low-cost homes. HUD improvement loans are designed to provide affordable home improvement loans to consumers who need them via insuring or backing up the loans in case of default. This assures the private lenders that they won’t take on the risk of loss even though the institutions may cash flow the improvement loan up front. The maximum amount available under the HUD program is capped at $25,000 and is available for funding structural improvements to a single-family home or a nonresidential structure. For multiple unit structures, the program caps financing at $12,000 per family unit, and an aggregate total of $60,000 for the entire facility. HUD financing for these projects is provided with a fixed rate of interest set at market figures. For the lender, the program reduces most of the risk in such a loan by covering up to 90 percent of any single loan should the loan go into default. There is a cost or premium charged for the insurance, at a rate of $1 per $100 financed. Lenders usually pass this fee along to the borrower or recover it through a slightly higher interest rate. Either way, the lender tries to avoid paying the fee cost outright. Conclusion Like any financing tool, home improvement loans have their purpose and can be very beneficial if used wisely. They offer the ability to fund large construction and improvements to a home where consumers would otherwise not be able to afford such changes on their own via cash. However, like any loan, consumers need to be prudent in their use, making sure not to overextend themselves with too much loan liability. While these loans can be very attractive for their purpose, borrowers can easily get themselves in trouble borrowing more than they can pay each month. So consumers should never pursue a home improvement loan before adequately planning how to pay for it and still being able to cover all their necessary monthly expenses as well. Previous - Common Problems Return to Home Page