As we all know, the housing bubble has popped. This has put a strain on people who were hoping to use the increased monetary value of their homes to perform some much needed home upgrades. The crash in home values across the nation means there are many people who are now living in homes that have not built up any added value over the past couple years. But if you have a home improvement you have to get done, how can you get the loan you need without having any equity in your house?
In a rising housing market you can buy a house value one year and in the next year the value of the home will actually increase by a few percentage points from one year to the next. You would then be able to borrow money against that added value from a lending institution and use that money for a big home repair project. So if you bought a home for $175,000 a few years ago it might actually be worth $185,000 today with normal economic growth.
These days many home prices have actually dropped in the past year or so, which means a lot of people are now paying for homes that are now worth less than what they originally paid. When you owe more cash on a house than what it is valued at then you are said to be “underwater” with your mortgage payments. This means they don’t have that extra home value which is known as “equity.”
If you’re searching for a big home remodeling loan then you may want to think about applying for an FHA home improvement loan from an eligible loan partner. There are lots of sellers of these kinds of loans, they offer a low interest rate and you can be eligible to pay it off over a generous 15 years. Just about any one who owns a home can apply for an FHA loan and eligibility is less restrictive than most traditional lending institution loans. You do not have to have equity in your home to apply for a Title I home improvement loan.
LendingClub is a peer-to-peer service that offers personal loan rates that are much lower than a bank. You can create a free account to learn more!
If an FHA loan isn’t going to work for you and your credit is still decent, try an online home improvement loan from a financial institution like the LendingClub. They offer personal loans that have a much lower interest rate than a bank, they are one of the few growing financial organizations out there, and they are community-based, so its really a lot of people helping each other.
Another great way to keep the costs of a home upgrade project down is to do at least some of the labor yourself. There are lots of easy DIY home improvement jobs most people can do around their homes with just a little bit of know-how and some elbow grease. For many home improvement jobs the highest expense often comes from the amount of manual work involved, so by doing some of that work yourself, you can really reduce the total cost of the overall job.
Most manageable house repairs can become major headaches if they are allowed to go unaddressed for too long. If you have a serious house repair that needs to be done, don’t let your home’s dropping value prevent you from getting the money you need to make the repairs. And, as expected, big home improvements always end up costing more than the small ones.