In today’s real estate market, a good number of homeowners are electing to stay in their homes rather than try to sell their properties when their area is already heavily saturated with homes for sale. To accomodate growing families and changing needs, many owners are seek to build additions or make modifications to their existing homes. In this article, we’ll explore some of the home loan programs that consumers can use to help finance their home improvement projects.
Home Equity Loans – Typically, home equity loans are taken out as second mortgages and cash is received in a single, lump sum payment. Interest rates for home equity loans are usually higher than for borrowers’ first mortgages as they are considered riskier loans for the lender. This is because the first lien holder would be in a stronger position to collect in the case of a borrower’s default. Mortgage rates are often fixed and some have balloon payments where the existing balances are due upon completion of the introductory periods.