Christian Low Income Home Improvement Loan
A Christian low income home improvement loan can actually come in many forms and much of the success of getting a lending agreement will depend on the homework done in finding the right lender for the homeowner's situation. There are actually five ways to secure a low income home improvement loan, and one may apply to the circumstance of the reader. While some paths leading to the desired lending agreement may not fit one's circumstances, an understanding of how the lending system works for a home improvement lending agreement will help in not wasting time with certain sources of money. The five sources of borrowing are: first mortgage, second mortgage, refinances, unsecured lending agreement and grants. For the person in the low income bracket, the most difficult loans to obtain are the first two, but correspondingly, the interest rates on these loans are the lowest.
A first mortgage may be the source of a low income home improvement loan if the borrowing history has been a positive one. If a person seeking a lending agreement has made all but a few of the mortgage payments on time, there may be the possibility of tying a home improvement lending agreement to the existing mortgage. The original mortgager may lend money against the mortgage being carried by that company. If a family has been in a house at least ten years, a good relationship should have been established and could be the basis of a lending agreement. But it should also be noted that if during that ten years a number of late payments with other credit accounts were made, or the debt to income ratio has risen dramatically, the chance to get this kind of lending agreement may be nil.
The second source for a low income home improvement loan may be a home equity line of credit, also known in mortgage circles as a HELOC. This type of lending agreement is a loan against the equity already built into the original mortgage lending agreement. Over the years as mortgage payments are made, more and more of the mortgage principle is pared down and less and less of the house is actually owned by the mortgager. It is that equity that is the basis for a HELOC, which can actually be used for anything, but for the purposes here will be used for improvements on the residential structure. This kind of borrowed money is offered at banks, credit unions and lending companies with banks and credit unions offering the lowest interest rates. A HELOC is a good lending agreement because the interest on the loan can be deducted in most cases from taxes. But the potential borrower should be aware that a bank will only accept borrowers with a credit score at about 640 and above and a low debt to income ratio.
The third source for a low income home improvement loan may be in the form of a mortgage refinance. As said earlier, long years of paying on a mortgage will have produced equity in the house. If a house owner refinances the residence for the original or near the original price, the equity can be taken out and used for something like a home improvement. The downside to this approach is twofold. First, the refinance means that basically a homeowner is stating over again, and the house is suddenly no closer to being paid for that when first purchased. Secondly, this lending agreement may not be available if over the years since the original mortgage was taken out there have been late payments, defaults or other credit issues.
If there is no equity in the house an unsecured lending agreement offered by a loan company may be the answer. In this scenario, a much higher rate of interest lending agreement may be secured through a lending company that does most of its business with those who have lower credit scores or higher debt to income ratios. This type of lending agreement is called unsecured because there is no collateral to help secure the borrowing agreement. If there is not a fairly new car in the family with a clear title, or high quality jewelry or stocks and bonds or an attachable pension or retirement plan, a lending agreement may be made with just the signature of the borrower. But because there is no collateral, the price of the low income home improvement loan has suddenly gotten much more expensive. Higher interest rates mean much higher monthly payments to repay the loan and may douse the enthusiasm for a low income home improvement loan. "This is my commandment, the ye love one another as I have loved you." (John 15:12)
There is a final resource for a low income home improvement loan and may be a grant or loan through the federal government. The Department of Housing and Urban Development offers a number of low income and low interest loans and a few grants that do not have to be repaid and these grants and loans must be applied for through local housing authorities and each one is defined for a very specific part of the low income housing market. For information on these available funds, a person can visit the HUD website to find the particulars. If the reader is a Christian, remember that we have the God of the Universe on our side. The One who spoke matter into being can provide the funds for a second bathroom or a new roof or an additional bedroom for grandma. Don't rush Him, for God has His own timetable in such things. Remember that He may not come when you call Him, but He's right there on time!
Bad Credit Christian Home Improvement LoansMost applicants will find that bad credit home improvement loans are not as easy to obtain as some other types of bad credit financing. A poor credit history and low score may not keep someone from getting the financing to buy a vehicle, but these are significant factors in the housing finance industry. When someone fails to make car payments, the car can be repossessed. It's not that simple to foreclose on a house. The process is lengthy and costly, and can be particularly difficult for a lender who does not hold the first mortgage lien on the home. This is why lenders review applications for home improvement financing so carefully. Few financing institutions are in the business of deliberately offering bad credit home improvement loans to homeowners. From the consumer's standpoint, this can be extremely frustrating or an opportunity to take the necessary steps to improve one's financial reputation.
There are a lot of fun television shows that highlight various home and landscaping projects. Many viewers get the decorating and gardening but after seeing the before and after videos of what other people have accomplished in their homes. It's fun to dream about freshly painted walls, upgraded kitchen cabinets and countertops, airy sunrooms, and spacious patios. These kinds of features and upgrades often increase a house's market value -- another tempting reason to hop onto the improvements bandwagon. But a person who only qualifies for bad credit home improvement loans may be better off, from a financial perspective, dreaming the dream and postponing the projects. Besides, the reality isn't always as satisfying as the dream. The wisest man who ever lived, King Solomon, tried finding fulfillment in projects. He writes: "I made me great works; I builded me houses; I planted me vineyards: I made me gardens and orchards, and I planted trees in them of all kind of fruits: I made me pools of water, to water therewith the wood that bringeth forth trees . . . And whatsoever mine eyes desired I kept not from them, I withheld not my heart from any joy; for my heart rejoiced in all my labour: and this was my portion of all my labour. Then I looked on all the works that my hands had wrought, and on the labour that I had laboured to do: and, behold, all was vanity and vexation of spirit, and there was no profit under the sun." (Ecclesiastes 2:4-6; 10-11).
Of course, sometimes the financing isn't needed for upgrades and additions, but for repairs that are needed to maintain a house's market value. Someone in financial difficulty usually concentrates on providing food and other necessities for the family. Housing repairs are low on the priority list, and rightly so, but they will eventually need attention. Applying for bad credit home improvement loans, however, is only one possible option. Depending on other economic factors, such as the value of the house, the amount of equity, the household income, and current interest rates, it might make sense to refinance the first mortgage. Financial experts often advise that a monthly mortgage should not exceed twenty-five percent to thirty-three percent of the monthly income. If the homeowner qualifies for refinancing, and the new mortgage payment is within the suggested guidelines, this may be the best option for obtaining funds for repairs. However, this only works if there is enough equity in the house to keep the total amount borrowed at less than eighty percent of the appraisal value of the house. For example, if a couple has a $60,000 mortgage on a house that is appraised at $100,000, they have equity of $40,000. By refinancing, they can get a new mortgage of $80,000. After paying off the old mortgage, the couple now has $20,000 for household projects and repairs. This can be a much better financial decision than applying for bad credit home improvement loans. However, the couple needs to take into consideration such factors as the closing costs, the interest rate, and their ability to afford the new monthly payments.
Another option is to take out a second mortgage or a home equity line of credit (HELOC). The interest rates for these kinds of financing are usually higher than those for first mortgages. Here again, the couple needs to consider the closing costs and the monthly payments. People often take out second mortgages and HELOCs for purposes other than the house, such as for debt consolidation, vacations, or to take advantage of investment opportunities. This is because the payments made on a second mortgage or to a HELOC are usually tax deductible. However, many financial experts advise against this practice. If the payments cannot be made, the family could be in danger of losing their home. But it's certainly better to obtain a HELOC than apply for bad credit home improvement loans. Still another option for some individuals is to apply for a personal, or unsecured loan. This means that the loan is given on the basis of the person's financial reputation and is not linked to an asset. If the amount that is needed for the project isn't astronomical, a person with a good track record of paying bills on time and that has a steady income may qualify for this type of loan without any difficulty. The interest rate will probably be higher than that for a first mortgage, but the application process will be faster and there will be no closing costs.
These options aren't available to everybody. A person with a poor financial history who must make repairs to his home has one other option before applying for bad credit home improvement loans. Federal and state programs provide grants to qualified homeowners that can be used to rehabilitate their properties. The U.S. Housing of Urban Development (HUD) is the first place to look for grants of this type. The department often works in conjunction with state and local agencies to assist homeowners through the application process. Unlike loans, a grant does not need to be repaid. This can be such a boon for a Christian family who needs a hand-up out of a financial difficulty. Only as a last resort should homeowners consider applying for bad credit financing. Before beginning the process, they must understand that most lenders require an estimate from a contractor of the repairs that are needed to the house. Only essential improvement will be approved and the homeowner has the responsibility of proving that the listed repairs are essential. The interest rate will be very high compared to other options and the house will be listed as collateral. If the homeowner defaults, she may lose her house. Homeowners should carefully consider their dreams and budgets when applying for home improvement loans. Only for essential repairs, and after all other avenues have been exhausted, should the homeowner apply for bad credit home improvement loans.