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APPENDICES
APPENDIX A: FINANCING HOME IMPROVEMENTS
There are a dozen possible ways for willing owners to finance needed home improvements. The various
methods are listed below. It should be noted that several loans are insured by the Federal Housing Administra-
tion. The FHA does not make loans; it merely insures the lender against loss in the event the property owner
defaults in his payments. For this reason the interest rates on these insured loans are usually lower than con-
ventional financing.
FHA Title 1. One of the more popular types of remodeling loans, FHA Title I, can be obtained from any
bank or lending institution which has been approved by the FHA. Any property owner with a good credit record
and a regular income can obtain this loan as long as he can make the monthly payments without undue hardship.
No down payment is required. The law provides that work done must "substantially protect or improve the basic
livability or utility of the property. " An application for a Title I loan to repay for work already done is not
acceptable.
The maximum amount an owner may borrow for making improvements to a single family house is $3,500.
If one has a two or more family dwelling, he may borrow $2,500 per apartment up to a total of $15,000.
What will it cost to borrow under this plan? The borrower is charged approximately five dollars per year
for every $100 borrowed up to $2,500, and then four dollars per $100 for any amount over $2,500. See the chart
on the following page.
If one borrows $1,000 and wants to pay it back in a year, he would sign a note for $1,052.63. His
monthly payments would be $87.72. If he wishes to pay it back in five years, the monthly payment would be
$20.79, but his note would amount to $1, 246.96. The longer one takes to pay, the more it costs; this is true for
any loan.
If an owner borrows $3,5000 for 60 months and wants to know his monthly payment, he simply adds the
payment for $2,500($51.96 per month) and the payment for $1,000($19.93) underthe Four Dollar Gross Charge
Table. In this case his monthly payments would be $71. 68.
The advantage of a Title I loan is that it can be processed and approved in approximately two days with
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