If the house you live in and own is in desperate need of repairs and upgrades but has no equity in it, you might have trouble getting a regular home equity loan if you need cash to make the needed repairs. Lenders typically give home equity loans only when a person has equity in the house. If you do not have equity in your house but need cash to make repairs on it, here are several options you could consider using.
Option 1: Personal Loan
A personal loan is a type of loan you can get without having collateral to use for it. With a personal loan, you can borrow money and use it for any purpose. If you would like to use this option, you may need to have decent credit, in order to qualify for the loan, and you should expect to have a relatively high interest rate. The rates on these types of loans are higher because they do not require collateral. If you are not sure if this is the right option for you, you could always look into getting one to learn more details about the terms available.
Option 2: Title 1 Home Improvement Loan
The second option you could consider is a Title 1 Home Improvement Loan, which is a form of FHA loan. This type of loan is designed exclusively for people who want to remodel their homes but cannot get home equity loans due to not having enough equity in their houses. With a Title 1 loan, you can get the loan without collateral if the amount is small. If the amount is over $7,500, though, you must tie the loan to your house.
The purpose of these loans is to give people a way to remodel fixer-upper homes. When someone remodels a fixer-upper, the value of the house will often increase by a lot. In some cases, the value of the house will increase more than the amount the person spent to remodel it.
Some lenders will actually base the amount they will loan a person on the expected value of the house after the person makes all the needed renovations and repairs to the home.
These are two good options to consider if you need money to make repairs on your house. If you are interested in applying for a loan like this, contact a lender that offers home remodeling loans.
Share19 September 2018
When it comes to borrowing cash for a new house or a nice car, how much money do you really need? Although you might be tempted to mortgage yourself to the brim or borrow a little more than you should, the fact of the matter is that everyone has financial limits. My blog discusses the impact of borrowing more than you need, so that you can make smarter decisions with your money. In addition to keeping you out of trouble, this valuable information might also improve your quality of life and protect your financial future. You never know, it could make all the difference.
