Home improvement is something that many people turn to at some time or the other to make their homes much more presentable and to make minor repairs and alterations to the home. Since this is a considerably large project, many people seek home improvement loans to get the job done. And consequently, there are also many government home improvement loans that help a borrower obtain a loan.
Though there are government home improvement loans available, they are rather difficult to obtain. Their requirements are rather stringent, wherein individuals tend to get discouraged from making transactions with them. Moreover, it is necessary for one to wait for a long time before benefiting from government home loans. This is why people today opt to borrow from an FHA approved mortgage company that helps them get government home improvement loans.
The FHA helps customers receive their government home improvement loans by insuring the loans that are made by private lenders with the intention of improving properties. The down payment for these loans is usually about 3% of the amount required for home improvement. The interest rates and discounts on the government home improvement loan are negotiable between the borrower and the lender; without any interference from the government.
Once the homebuyer selects the FHA approved lender they wish to do business with, has to arrange for a detailed proposal stating the scope of the home improvement project. This is followed by an appraisal to find out the value of the property before and after renovation. If the lender finds that the borrower is credit worthy for the loan, then the loan is sanctioned for an amount that covers the cost of improvement of the property and other closing costs.
This amount of the loan is structured to include a contingency reserve that covers twenty percent of the home improvement costs as protection against any extra and unintentional work that arises in the original project. The amount of the government home improvement loan is released to the contractor as and when the home improvement gets completed. The borrower has the liberty of choosing to repay the amount in payments in numerous installments.
And to ensure that the home improvement job gets completed, ten percent of each payment is reserved and paid once the lender confirms that there are no liens to the home. So it can be seen that if the homeowner is not able to pay a payment for a reason or the other, the FHA shoulders part or all the loss that is suffered by the mortgage company.
The FHA approved government home improvement loans are the best option for lower and middle class people. It helps them achieve their home improvement dreams as their interest rates are much lower than the interest rates of other loans in the market. Moreover, with the FHA backing, it is possible to get a reduction in the down payment requirements and closing costs can also be provided by the FHA lender.