Various home improvement loans available for all incomes

Here are financing options for low-income homeowners and those who want to avoid tapping into their home equity for home improvement projects.
http://www.rutlandherald.com/article/20130521/BUSINESS05/705219973

Published May 21, 2013 in the Rutland Herald Various home improvement loans available for all incomes By Pat Goudey O’Brien Purchasing a home is often cited as one of the largest — if not the single largest — financial transactions a consumer will make, while maintenance and improvement can also weigh in on the list of expensive propositions. As a result, most people seek loans to finance home purchases, and to make needed repairs or improvements. To secure financing for home improvement projects, the house itself may provide equity value to secure a loan or second mortgage. However, for borrowers who don’t want to tap into their equity, some lending institutions offer alternatives for home improvement financing. In addition to options like second-mortgages or home-equity lines of credit, KeyBank (NYSE: KEY) of Vermont allows qualified borrowers to acquire unsecured loans for needed repairs or improvements, said Brigitte Ritchie, director of community relations. “The maximum [loan] amount available depends on the person’s personal credit,” Ritchie said. “But, it’s a great way to finance repairs or improvements for people who don’t want to tap into the equity in their home.” Interest rates for unsecured loans for home improvement may be higher than those for home equity or secured lines of credit, said Ritchie, but they are often lower than credit card rates. And, while home equity loans and lines of credit may be used for things not related to the home, funds from an unsecured home improvement loan must go into the home. Philip Smith, KeyBank’s senior vice president of community banking in Vermont, said the prospect of borrowing without using equity in the home is attractive to consumers, but it may not be the best option for all homeowners, based on their personal financial profile. “The people on my team have been trained to have a broad conversation about a borrower’s financial profile, and not rush into one type of loan or another,” Smith said. “It really comes down to the individual’s situation.” Sometimes, consolidating debt from credit cards or other types of loans is the best option, he said, with a low-interest secured loan providing an affordable alternative. The bank analyzes the situation, looks at fixed loans versus a line of credit, and prepares a recommendation on the best product for the individual person, added Ritchie. Unsecured loans require broad documentation of the borrower’s income and debt profile, so consumers should be prepared to provide data including several years of tax returns, a balance sheet on income and financial obligations, and assets and liabilities, said Ritchie and Smith. For the self-employed or business owner, additional information on the business will be required. “The most important advice I can give is to sit with your banker, describe the particulars of your situation, your financial status, and your project plans,” Smith said. “Have that larger, holistic conversation about where you are and where you want to be.” For moderate- and lower-income homeowners, financing options may be available through NeighborWorks Alliance of Vermont, which has home ownership centers in St. Albans, Burlington, Barre, Lyndonville, West Rutland, Springfield, and Brattleboro. The Green Mountain Loan Fund, which offers rehabilitation and repair loans through the Central Vermont Community Land Trust (CVCLT), is associated with the NeighborWorks Alliance center in Barre, which serves Washington, Lamoille, and Orange counties. The home ownership center provides extensive services to moderate- and low-income homeowners, including debt counseling and project financing, Dupuis noted. The agency also offers a home repair and rehabilitation program that sends a rehabilitation specialist out to the home, at no cost to the homeowner, to write job specifications for things like roof repair, structural repairs, heating and electrical system repair, and weatherization. The specialist remains available to help with choosing a contractor and supervising the work during the course of the project. Program eligibility is determined by a borrower’s income level and the number of people in the home, among other factors, said Patti Dupuis, loan-fund manager for the Green Mountain Loan Fund. “It’s a great program,” Dupuis said. “Our specialist inspects the home and finds things that need to be upgraded to make the home healthy and safe, [and] comes back and provides us with a scope of work and the costs.” A variety of loan arrangements can be made, said Dupuis, including a zero-percent deferred-payment option for some borrowers, said Dupuis; the loan doesn’t have to be repaid until the home is sold or the title transferred to a new owner, though a borrower can begin to pay back the loan sooner, if preferred. Chandra Pollard, director of the home ownership program at the CVCLT, said the Healthy Homes Program provides grants to eligible low- or moderate-income homeowners for things like lead paint abatement, as well. Visit www.vthomeownership.org/ and www.cvclt.org. for more information.