Most hardworking homeowners know all too well the struggle with costly home repairs and improvements. Whether it is a steady flow of little problems, a large unexpected repair or a real-life version of the Money Pit - keeping up can, for many, become insurmountable. What many folks don't realize, however, is that there are legitimate government programs which enable homeowners to receive relatively simple, low-interest loans for property rehabilitation - and they're not quite what most people think.
The Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) have developed a way to make it easier for homeowners to make necessary repairs and/or upgrades to both newly-acquired properties and homes that have been owned long-term. For those who are loathe to involve themselves with the federal government either because they are true bootstrappers - or because they foresee endless red tape - the first thing to know is that these are loans administered through private lenders. The FHA and HUD simply insure the loans and this helps to both make them easier to obtain and expedite the process. The second thing to remember is that this is not free money. These are loans to qualifying homeowners and repayment is required. What these programs offer is a higher probability of qualification, lower interest rates, and less red tape than mainstream loans through private lenders.
The two main federal programs are HUD's Title I Home & Property Improvement Loan and FHA's 203(k) Rehab Mortgage Insurance. HUD's Title I was developed to be used for alterations, repairs and improvements for a single family house that has an existing mortgage. It is not to be used when buying a property but can be used in conjunction with the 203(k) if refinancing is involved. The maximum loan amounts range from $7500 to $25,000 and these amounts depend largely on how the property is classified. Maximum loan terms are anywhere between 12-20 years and there is no penalty for pre-payment. While the interest rate is fixed and based on common market rate in the area, it is often negotiable. One very appealing aspect of the Title I loan is that any amount under $7500.00 does not require a mortgage or deed-backed security. For do-it-yourselfers, this can be a wonderful way to get things done, because the loan amount can be used entirely for materials.
FHA's 203(k) Rehab Mortgage Insurance can also be used for alterations to an existing home, but is most commonly utilized by buyers looking to finance both the purchase of a home and the cost of its rehab together in one single mortgage. This is an excellent program for folks looking to buy a "fixer-upper", because it helps to avoid the costly and complicated process of many interim-acquisition improvement loans. These often come with high interest rates, short repayment terms and hefty balloon payments because the value of the property prior to renovations can be difficult to determine. The FHA also offers a 203(b) Streamlined loan for homes requiring less than $5000.00 of work. Because the 203(k) loans involve mortgages, the terms are more involved than the Title I loans, but this information - and and anything else you need to know about HUD and FHA loans can be easily found at portal.hud.gov.
It is understandable that many self-sufficient property owners will scoff at the notion of any type of public programs. But again, it is important to understand that these are really nothing more than insurance incentives intended to protect lenders - quite like the way the FDIC protects your bank accounts. Also, by keeping a home safe, attractive and functional, you work to benefit entire communities and society as a whole. Both of these programs can be used to make alterations needed for persons with disabilities and upgrades to keep a home as energy efficient as possible. And, perhaps most importantly, a well-maintained home keeps neighborhood property values up, excessive development down and can provide future generations with affordable homes that have character and historical significance.
1) Your contractor doesn't give you a detailed quote. This is often because he's not pulling permits, so the quote wouldn't include a line for the building permit costs, which would be (or should be) an instant red flag for the homeowner.
2) No plans or drawings are submitted. Permits require drawings or plans. If the contractor doesn't have any, guess what? He also most likely does not have the permits.
3) He does not offer you a copy of the lien waiver once the job is completed. This is an important one, as it ensures that you are not held responsible for the material costs from the companies the contractor has not yet paid.
Feeling that Holiday spirit of giving? Not sure who to help? Well look no further. We're highlighting 10 worthy, national charities and encouraging everyone to give what they can.
Welcome to the fifth installment in our 10-part Charity Blog Series. We applaud the movements across America that work to prevent homelessness and help low-income families. Keeping folks and families in homes and building affordable housing for the less affluent is noble work, to be sure. But what happens when that affordable house starts showing its age? After all, no home is immune to wear and tear. This is where Rebuilding Together steps in.
Another national charity and a five-consecutive-year recipient of the Charity Navigator's 4-star rating, Rebuilding Together is dedicated to providing "free rehabilitation and critical repairs to the homes of low-income Americans." Some charities build homes. Rebuilding Together makes sure those homes stay inhabitable.
Rebuilding Together's list of national initiatives includes:
- National Rebuilding Day: A national event in April that sees hundreds of thousands of volunteers across the country repair and restore houses and nonprofit facilities.
- Safe at Home: addressing home repair issues that pose a possible safety concern to the homeowners.
- Gulf Coast Operations: Rebuilding low-income houses in the Hurricane Katrina-devasted areas of Mississippi, Louisiana and South Texas.
- Veterans Housing: Increasing accessibility for active and retired service members and veterans.
A few more equally worthy initiatives round out the Rebuilding Together group of national movements, all with a focus on home rehabilitation, home repair and keeping homes safe for low-income families.
True or false: We've reached the bottom of the home remodeling decline?
Harvard says it's true, so it must be, right?
2010 is the Year of the Hammer, particularly by the second quarter, the study (released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University) suggests. Despite unstable housing market prices and roof-shattering foreclosure rates, potential remodelers may see "favorable financing costs" and increased home sales as reasons for taking on some nonessential improvement projects.
If the prognosticators in Crimson Country are correct, this is great news for contractors, remodelers and homeowners alike. It's still too soon to pop the champagne, but tell us, what's the first project you'll hire-out?
One thing I've learned over the years is remodeling a home can put a major strain on your marriage - the bigger the project, the bigger the strain. That's why it was no surprise to read that the owner of Clingstone Mansion in Jamestown, RI burned through two marriages in the course of remodeling the unique home since purchasing it in 1961.
The home, in its finished form, is spectacular. It sits on a narrow rock in Narragansett Bay, accessible only by boat and offering panoramic views of the water from its 65 windows (see the slideshow).
However, when Henry Wood, a Boston area architect purchased the home, it was a "roofless, windowless, floorless, powerless, waterless house." Through the hard work and effort of his family, friends, and volunteers, it is now a beautiful 23-room, three story eco-mansion that collects rainwater in a 3,000 gallon cistern, heats it with solar panels, and generates electricity with a wind turbine.
Although the finished product is magnificent, the upkeep is still a tremendous task. Maybe he should have read our article on Surviving Your Remodel. What do you think, is the home worth the personal cost? What's the biggest fight you've had with your spouse over remodeling?
Ever wondered if Cheryl Tiegs's home is as beautiful as she is or how designer Angelo Surmelis of "Rate My Space" decorates his own home or where in the world is Cy Curnin, lead vocalist of The Fixx? Find out those answers and more in our new "At Home with..." series that takes you inside the homes of celebrities. Interested in seeing inside the home of your favorite celebrity? Write a comment below and let us know.