Home Repair Loans

Home repair loans are great for those emergency leaky roofs or the shingles that have gone beyond their twenty years and just need replaced. These lending agreements are also wonderful for that driveway that needs blacktopped again or a swimming pool that needs a new liner or perhaps electrical wiring that is thirty years beyond its prime. This special lending agreement is important for the over 70% of Americans who live pay check to paycheck and do not have savings to cover these kinds of major expenses. Living paycheck to paycheck means, in most cases except for the very destitute that debt has enslaved our country and our citizenry must count on loans for those much needed maintenance projects on the largest single investment most of us have. So what are the best places to look for these lending agreements?

If a person has stellar credit, the best home repair loans come from a bank offering a home equity line of credit. These lending agreements, nicknamed HELOCS by the financial world, are also offered by credit unions and are loans based on the equity a person has in his/her place of residence. These borrowing offers are among the most favored by financial experts because in the case of banks and credit unions, the interest rates are quite reasonable and while no borrowing is always a good way to avoid the trap of debt slavery, these HELOCS are the best in terms of loans. What percentage of the home equity a bank or cu will offer depends form institution to institution. Some may allow 70% of the equity and some may allow 50% to be used as the amount of the loan. These lending agreements are packaged as actual checking accounts on which the borrower can draw checks for the home repair needed, although the HELOC is not required to be used solely for home repair, so after the roof is finished a Bahamas vacation might be in order!

One of the things that need to be kept in mind about a HELOC from a bank: an above average credit report score needs to be presented by the borrower. In many cases, a score of 640 or above is required for consideration as well as a debt to income ratio of no more than 40%. In order to figure the ratio out, compare monthly income to monthly debt payments including the mortgage. If the debt payments are above 40%, the ratio is considered unacceptable by banks and perhaps by credit unions, although they are a bit less stringent in their requirements for lending money for home repair loans. A HELOC will require an appraisal of the house and have closing costs. The HELOC will be a revolving charge, just as a credit card is, and will be, in most cases, a variable rate of interest. One of the attractions for a HDELOC is that the interest paid each year on the loan is deductible, just a mortgage interest is.