| Cash - If you have enough money in your savings | | | | loan has to be made by an FHA approved lender but |
| account to pay for the proposed remodeling job in | | | | fortunately most mortgage lenders are approved to |
| cash then that would seem to be the most logical | | | | make loans through this program. |
| course of action. Never pay too much to your | | | | Home Equity Line of Credit - A home equity line of |
| chosen remodeling contractor upfront though. | | | | credit is a form of revolving credit in which your |
| Payments for a larger job - like a basement | | | | home serves as collateral. You can tap into the funds |
| conversion- should be staggered at agreed intervals | | | | as necessary and the credit line is usually set at |
| throughout the course of the project. Come to a | | | | about 70-80% of the appraised value of your home |
| reasonable agreement with your contractor in | | | | after the balance from your first mortgage is |
| advance and make sure you get it all in writing. | | | | deducted. |
| Home Improvement Loan - The Federal Housing | | | | This form of financing is great for those with good |
| Administration (FHA) administers two different loan | | | | credit and a decent amount of equity already built up |
| products available to home owners looking to | | | | in their home. If this is the way you choose to go |
| remodel or upgrade their property - Title 1 and the | | | | though only use what you really need to finance your |
| lesser known Section 203(k) program. A loan under | | | | remodeling projects, do not be tempted to use the |
| the Title 1 program is allows people to borrow up to | | | | money for purposes unrelated to remodeling |
| $25,000 for remodeling projects but for a single | | | | (vacations, new car etc.) |
| family home only and the loan can only be made by | | | | Refinancing - If interest rates today are significantly |
| an FHA approved lender. | | | | lower than when you first purchased your home then |
| The Section 203k program is geared toward the | | | | refinancing the mortgage on your home may be the |
| homebuyer who is considering purchasing "a fixer | | | | way to proceed. This option allows you to pay off |
| upper" and is essentially a single long-term, fixed or | | | | your existing mortgage with the new loan and use |
| adjustable rate loan that covers both the purchase | | | | the remainder to pay for your remodeling projects. |
| of the home and the costs of remodeling. Again the | | | | |