Understanding how VA Loans for Home Improvement can help you
Every house needs some work- no matter how ‘perfect’ it may be when you buy it. Stay there long enough and you will need to remodel, do some maintenance or add on to it. Blowing away your savings to do that is not necessary- for a VA loan for home improvement is there to help you. While it works like a traditional loan for home equity, it still has some points that you need to be aware of in order to get one, such as:
- Only for veterans with VA mortgage: You will need to be a veteran and have a house that has been brought using VA Mortgage.
- You can also take your supplemental loan and your original mortgage at the exact same time: While buying your home, if you know that it will require repairs or a remodel, then taking this loan at the same time can be a great option. It does not matter whether the house is on foreclosure, on a short sale or even a fixer-upper.
- It could get you a better deal: There are two ways to get a home improvement loan. You can add it on to your mortgage at the same time while you are buying your home; or as a second mortgage, which is a junior lien. If you add it on to your mortgage, then the charged interest rate cannot be higher than your primary mortgage, which is not true for second mortgages. The result- you may end up saving quite a bit of money!
- A repayment period of over 30 years: Generally, home equity loans come with 5 to 15 year terms, while VA loans for home improvement allow financing options for a 30-year period, leading to lower monthly payments for you.
- Use your VA loan to get your home’s mortgage current: These loans are to help you improve your home and not for bailing you out if, you have fallen behind on your mortgage payments. In fact, it may be mandatory for you to stick to your payment schedule while taking supplemental loans. However, there exist cases where you can use such a supplemental loan for getting to your current mortgage if you are late on making payments or are in default.
- Going in to a different lender means a wait for VA approval: If you use some other lender than the one you use for your first mortgage, or go to a lender not VA-approved for automatic lone closure, you may end up waiting for loan approval by the VA.
- Use these loans for addressing real problems in your home: By definition, these loans are for making a substantial improvement in your property’s basic livability or improvement. You cannot use home improvement loan for adding in a swimming pool or creating something fancy in your house.
Thus, with these things in mind, you should be able to get around the VA Improvement Loans process and successfully procure one if you need it.