How To Get Financial Help For Home Improvement Projects

For most families planning to remodel their homes, the biggest problem is financial—where to get the money. Today there are many possible sources of home improvement money and a variety of methods of acquiring it. Each type of loan has its own limitations and each has advantages over the other types.

The first item to consider in deciding what method of financing is best suited to a home-owner's own "Operation Home Improvement" project is the amount that will be required. If the need is great, the money will probably have to come as a loan from a mortgage lending institution. Smaller amounts may be obtainable from a credit union or private sources; in many cases a contractor or lumber dealer will allow the home-owner to repay his charges in installments.

Here are the most important methods of obtaining large sums of remodeling money: Refinancing or new mortgage financing, open-end or additional mortgage advance, Federal Housing Administration Title I home improvement loans and the individual loan plans of banks and other lending institutions.

The largest amount—if the owner has completely paid for his home or at least has a substantial equity in it can be obtained by getting an entirely new mortgage on it. New mortgage financing means exactly what the term indicates, to get a new mortgage on a "paid-up" home The owner of such a property can often borrow up to 50 percent of its appraised value, or even more. Refinancing is the procedure whereby the owner acquires a new mortgage loan of an amount large enough to pay off the existing mortgage on a home and to finance a modernizing project as well.

A development in the mortgage lending business- the open-end mortgage—has made refinancing procedures unnecessary for many thousands of families, even where major, remodeling projects are involved. Stated simply, the open-end mortgage is one containing a clause under which the lender can make additional advances of money for modernizing up to the amount of the original loan.

Homeowners who are not sure whether or not their mortgages contain open-end provisions should consult their lenders. Sometimes, a lending institution will write in such a clause, particularly if the institution has adopted open-end mortgages as standard procedure since the original mortgage was written.

The homeowner who is planning to get a new mortgage, either on a-new home or his present one would be well advised to insist that the lender include an open-end clause. Then, when remodeling becomes desirable later on the financing path will be simple and clear-cut.

Smaller home modernizing projects requiring expenditures of less than $10,000 can usually be financed without a mortgage involved in the transaction. And, as in the case of the bigger jobs, there are a number of possible sources of money.

One of the most common is the FHA's Title I home improvement loan program. The Title I program has benefited millions of homeowners and has been behind billions of dollars worth of remodeling projects throughout the country. Under the Title I procedure, the homeowner is allowed to borrow money for home remodeling, with the FHA insuring repayment of the loan.

The American family should realize that wise and responsible use of credit permits the enjoyment of better living standards without waiting or undue sacrifice. The many possible methods of financing and the many sources of loans make home improvement a particularly desirable credit purchase.