Home Improvement Mortgage Loan

A home improvement mortgage loan makes sense when it adds both value and added pleasure to your home. Traditionally, the top five home remodeling or improvements that provide both value and pleasure are bathrooms, kitchens, interior rooms, windows and room additions. A kitchen remodel might cost on average $15,000 but will yield a value return as much as 88%. A good bathroom remodeling might add up to 80% but the added value will be a bit less than the kitchen remodel. Landscaping projects which include outdoor attractions such as pools, jacuzzis, lighting, built in barbecues or outdoor kitchens also add to home value and enjoyment, but are not seen by potential buyers as important as are the top five improvements. If you have a project in mind, gather as much information as possible on the materials, supplies, and labor costs. Come up with a total and to be sure, add fifteen percent to that figure. Now correlate that total cost to the value the improvement would make to your home in real dollars. If the cost is far less than the added value, then certainly it would be a good idea to go ahead with the improvement. If it is on par with the value increase, then weigh the value your added pleasure will have, aside from money gain. If it is worth it to you personally, go forward. If the cost far exceeds what you might recover within a reasonable number of years in a sale of the home, then you might want to pursue it no further or revise the extent of the remodeling project. Modify your plans or the materials to be used in favor of a more budget conscious plan.

The home improvement mortgage loan process is the same as for any other home equity loan. The numbers have to be right for the lender, so that the loan will be approved by the underwriters. You cannot be, as a result of financing home improvement, adding too much to the mortgage balance. The loan process is the same in all cases: application forms must be completed, credit checks made, and a home appraisal must be done. As with all home mortgages, the income of the homeowner must be stated and verified, the existing mortgage amount substantiated, and other particulars of the original home purchase confirmed. Escrow must be opened and paid for, and loan documents generated and transmitted. The process can take as little as 10 days or as long as 30 days. It all depends on the facts of your case and on the lender’s efficiency.

Finding a good lender who offers the lowest interest rate on such a home improvement loan is the first and most important step. You will want a lender who keeps you updated on the loan process, from application submission to opening escrow to loan document finalization. At any step in this process, changes can be made as needed to reflect any changes in the loan market such as interest rates or loan to equity ratios. In some cases, a loan can bring the home mortgage amount in excess of projected or appraised value. During the time the loan is being processed, you might ponder how to generate additional income in the coming years to pay down the mortgage to what it was before the improvement or ways to speed up the mortgage extermination date. It is not out of the question to plan these things so well that by the time the mortgage home improvement loan has been repaid, the original mortgage amount has also diminished somewhat. Once the loan funds are obtained, you may also find that there are ways to stretch those dollars to add features you had not imagined you could afford initially. You might be able to call into play extra “sweat equity”, saving loan dollars by doing much of the work yourself and thus avoiding construction labor costs. Any funds that are not used in the project can be put back into the mortgage, returned as additional payment on the loan, and applied entirely to the principal. There is a world of options with respect to home improvement loans, the process of obtaining them and the repayment of those home improvement mortgage loans.