You Can Afford to Upgrade Your Home Without Using Equity
The housing bubble has burst and because of the crash in housing values across the nation there are a lot of people who are now living in houses that have not built up any added value over the past couple years. This has put a strain on people who were hoping to use the increased monetary value of their homes to perform some much needed home repairs.
In a normal active economy if you bought a home for $180,000 five years ago it might actually be worth $200,000 now. You would then be able to borrow money against that added value from a bank and use that cash to upgrade your house. That’s the sign of a rising housing market: you could buy a house for a certain value one year and in the next year the value of the home would actually increase by a few percentage points.
These days many housing prices have actually dropped in the past year or so, which means a lot of people are now paying for houses that are now worth less than what they originally paid. When you owe more money on a house than what it is valued at then you are said to be “underwater” with your mortgage payments. This means they don’t have that extra home value which is known as “equity.”
Fortunately you can still pay for home improvements even without having equity in your home. If you’re looking for a large home remodeling loan then you may want to think about applying for an FHA home improvement loan from an eligible loan partner. You do not have to have equity in your home to apply for a Title I home improvement loan. Almost any homeowner can apply for an FHA loan and eligibility is less severe than most traditional bank loans.
Another great way to keep the high price of a home remodeling project down is to do at least some of the work yourself. For most home improvement jobs the largest expense often comes from the amount of manual labor involved, so by doing some of that work yourself, you can really reduce the total cost of the overall project. There are lots of easy amateur home improvement things most people can do around their homes with just a little bit of know-how and a willingness to work.
Most manageable home repairs can become large headaches if they are allowed to go unaddressed for too long. If you have a important house repair that needs to be done, don’t let your home’s dropping value prevent you from obtaining the money you need to make the improvements. And, as you can guess, big home improvements always end up costing more than the little ones.