Home Improvement Second Trust
NEW! The newest type of home improvement loan is a second trust for home improvement. Unlike other second trust programs where value is based on the current condition of your property (before you start work). The Home Improvement Second is based on the value of your property AFTER the work is done. Also referred to as "As Completed" financing, it is useful to the homeowner whose first trust is at an attractive rate or who does not have enough equity in the property to pay for planned home improvements or improvements.
We can lend up to 90% (combined first and second) of the completed value. Also, it requires NO builder approval if your loan is $50,000 or less and there are no structural changes. If your loan amount is greater than $50,000 you will need a general contractor and have a "fixed price contract". We will not accept a "cost plus contract" or "sweat equity". The loan will close only one time to save you settlement fees and will modify to your permanent loan after your construction phase is complete.
While you are in the construction phase of the loan, you make interest only payments calculated at the Prime Rate plus %. You have the option of locking your permanent interest rate at any time. And after construction, you have the option of loan terms of 5,15 year fully amortizing term, or a 30 year term with a balloon due in 15 years. The 30 due in 15 is the most common option as the 30 year amortization cycle keeps your payment low and most consumers will sell or refinance well before the balloon comes due. There are no prepayment penalties on these programs, you are free to pay off or refinance the loan at any time.
Why the Construction Second is a better choice than a home equity loan.
The new Home Improvement of Construction Second Loan is better than a home equity loan because it offers you the security of a FIXED RATE and the convenience of one loan and one closing. Also, your loan amount is based on the value of your home after improvements, up to 100%. Best of all, you do not have to refinance your first mortgage.
I have included a list of the documentation needed to process your Remodeling Loan ,a section on Frequently Asked Questions and common misconceptions, a section on construction loan draw schedules, and information on construction loan fees .
NEW! A newsletter giving a detailed description of Home Improvement programs available by email.
We offer the ability to qualify and close your loan into several unique programs for borrowers with non traditional income or asset situations. Please visit my No Docs page.
One final but important note. Home improvement loans are complex and are a specialized area of mortgage lending. I have many years of experience in home improvement loans and in most years will close in excess of $3,000,000 of these loans. As an experienced mortgage broker, I have access to most home improvement loan programs available today and will research the market for the home improvement loan program which makes the most sense for you. I prefer to analyze your goals and financial situation before I recommend a loan program but I will always make sure you clearly understand the options available to you. I stay with my clients from the beginning to the end of the project. If there is an issue with the lender, I will intercede on your behalf. I work for you, not the lender.