Home Repair Loans - Secrets Your Banker Won't Tell You

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Maintaining a home can be a costly venture and most home owners don't have loose cash sitting in a checking account to utilize for repairs and home improvements. So most American home owners tend to borrow to complete this venture.

But please be aware, there are things that your loan officer won't tell you about that home repair loan that you are getting. So before you get a new mortgage loan to pay for major home fix-ups, ensure that you follow a specific guide to get money:

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First make sure that you pay as little interest on this loan as possible, so make sure you shop around, YOU DON'T NEED TO REFINANCE YOUR MORTGAGE. You should also try to get a tax-deduction for what you do pay for this mortgage loan and don't end up sacrificing your financial health and well being. Not doing this is the first step of placing yourself in the poor house.

Secondly ensure that you take into account all the variables when applying for that loan:

Where can you get the best financing?

How will the monthly payments affect your budget?

How much equity do you have in your home?

What is the nature of your home improvement project

How long it will take you to repay the debt?

These are key questions that should point you in the right direction. You must find the best loan option. But even then you must make sure that this does not cause your budget to collapse. If it does then you will be in serious problems with respect to the monthly payment. Having less than twenty percent (20%) of market value in equity in your home is a clear signal to wait. This means that in one felt swoop you can move from happy owner to foreclosed properties if the financial institution that you borrowed from goes belly up.

With respect to the nature of the project and the term life of the loan here are just a few questions you MUST ask yourself before taking on that loan.

1. How much does the home repair project cost? To calculate this you use the contractors bid amount and subsequently add 10% to 20% for potential cost overruns.

2. Will you be able to afford this? If you cannot easily afford the monthly payments on the loan, you are 'courting trouble' by even thinking about a home equity loan or credit line. As mentioned earlier but if you have less than 20% equity value in your home you will be forced to pay higher interest rates and you won't have any backup for emergencies.

3. Examine your other financial obligations? Your financial bases should be covered i.e you should be saving enough cash for retirement, to clear all existing credit card debt and at least ninety days living expenses saved in an emergency fund.

4. Finally will the project add value to your home? Some home repairs just don't add enough value, especially maintenance repairs. Many American home improvements add some monetary value, and normally you will not recover 50% to 75% of what you spend in added value. So the less value you're adding to your property the longer you should consider waiting until you can pay cash, instead of taking a home repair loan.

Home Repair Loans - Secrets Your Banker Won't Tell You