Pennsylvania Home Improvement Loans
Pennsylvania home improvement loans are flexible. Homeowners and buyers need
a better way to finance improvements on their Pennsylvania home. In the past, homeowners or purchasers wishing to finance
home improvement only had a few alternatives. These were 1) Pay for improvements
in cash or with credit cards. 2) Do a cash-out refinance based on the current
value of the home. 3) Take out home equity loans. This
still places the burden of funding the improvements on the homeowner who will
not be reimbursed until after the loan closes.
am a mortgage broker and represent 16 of the largest construction lenders in the
market. As a broker, I work for my client and not the lender, taking the time to
understand your situation and placing your loan with the lender whose programs
most closely matches your situation and needs. I am able to give you unbiased
advice and support throughout the process. Construction and renovation lending
is a specialized part of mortgage banking and most lenders or brokers do not
have the experience to guide you through this complex process. I have attempted
to give you some basic information in this paper but please do not hesitate to
call to discuss your individual project. At the most fundamental level,
construction lenders offer two types of product characterized by how they base
interest rates during the construction phase. I will refer to these approaches
as “One Step” and “Two Step”
Home Improvement loans are a variation of the "One Time Close" construction/perm product. The major advantage of a home improvement loan is that we lend against the finished or "as completed" value of the property rather than the current value of your home as most other lenders do. With other programs, you are out of luck if you do not have enough equity to complete the project.
The home improvement loan has two uses:
If you are purchasing a property that would be perfect if....... The first disbursement of your home remodeling loan acquires the property and subsequent disbursements occur at predetermined points in the construction process. After construction, the loan modifies into the permanent loan saving the cost of a second closing.
If you are remodeling your home because it would be perfect if.... The first disbursement of your home improvement loan refinances any liens against the property and advances the contractor any up front costs. Subsequent disbursements and modification follow the above process.
There are several programs designed for home improvement of Pennsylvania properties:
Under some of the above programs, you may act as your own General Contractor if the home remodeling costs are less than $50,000 and the "footprint" of the home is not changed. If your project is large or will change the foundation we will require a fixed price contract with a licensed contractor. Home improvement loans may require the use of a contractor. I have a section on contractor requirements and contracts.
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