How to Apply for a Home Improvement Loan

If you’ve been living in your home for a while, you might notice that things start to deteriorate. Roofs need to be replaced. Windows start getting a little drafty. That orange carpet that looked great when you bought the house doesn’t look that spectacular (or fashionable) any more. Your house might also begin to feel inadequate because it is too small. Perhaps you had more children and need to build an addition. Whatever the reasons, sometimes you need to get a home improvement loan. Making extensive changes to your house can be costly, and you might need a mortgage loan to help pay for it. There are several ways you can go about getting one.

Refinance Your Current Mortgage

If you are in a good financial situation with decent credit and equity in your home, you might be able to refinance your mortgage. If you’ve been living in your house for a while, you might be able to save on your interest rate while you’re at it. While credit is not as available as it once was, it is still possible for people to refinance their homes if the banks trust them to pay it back. When you refinance your mortgage loan, take extra money out to finance your home improvements. Be sure that you carefully calculate the costs involved prior to refinancing, so you make sure that you get the right amount.

Get a Home Equity Loan or Line of Credit

If you have equity built up in your current mortgage loan and have a great interest rate on your primary mortgage, you might want to opt for a home equity loan. Similarly, you can also get a home equity line of credit if you don’t know exactly how much the project is going to cost. These can be good options if you don’t want to refinance the whole house.

FHA Home Improvement Loans

The lesser known cousin of the FHA mortgage loan is the FHA Home Improvement Loan program. Like the FHA primary loans, the government will guarantee 90% of the value of the loan. You can borrow up to $25,000 to make improvements on a single family home. These loans can be used to improve traditional homes, manufactured homes, and even multi-family homes.

Getting a Home Improvement Loan

The first step to getting a home improvement mortgage loan is to find a lender. If you are applying for special programs like the FHA Home Improvement loan, you will want to make sure that your lender participates. Before settling on a lender, you may want to compare quotes in order to get the best rate. Since your home improvement loan probably involves thousands of dollars, you want to make sure you get the best deal.

After you have selected the lender with the best quotes, you will have to fill out a mortgage loan application. The lender will approve you based on several factors, such as your credit score, equity in your home, and income. During the application process, you will probably have to supply documentation like pay stubs, W-2 forms, tax returns, employer information, documentation related to your assets, and information about any other debt you might have. The more quickly you can get this documentation to your lender, the more quickly the loan will be approved. As soon as that happens, you can be on your way to making your home a better place to live.