November 17, 2011
FHA borrowers who want to repair or improve their homes have a variety of options to consider including FHA refinancing options for many different situations.
But not all borrowers qualify for those options. One reader writes, “I am current on my mortgage but found out I am not eligible for a Home Equity Loan because of the continuing decline in home values in my area.”
“I have one home improvement project that I really want to undertake which will add value to my home. Is the Title I Home Improvement loan something I could qualify for through an approved lender or are their income limit requirements? Is interest on this type of loan tax deductible?”
We’ll tackle the last question first simply by saying that borrowers should consult a tax professional with regards to these matters–tax law is complex and ever-changing and not something covered by our expertise at FHANewsblog.com. But a good tax pro can help, as can the government site www.IRS.gov.
When it comes to Title I loans, the HUD document “About Title I Loans” states, “ The applicant must have a good credit history and the ability to repay the loan in regular monthly payments. Both large and small improvements can be financed.” The rules for Title I loans include a 20 year term and a maximum loan limit of $25,000 for a single-family home.
Title I loans are fixed interest rate loans that are “generally based on the most common market rate in the area. It is negotiable between the lender and the borrower, and may vary between lenders.” The rules also add, “Any loan over $7,500 must be secured by a mortgage or deed of trust on the property.” The borrower must have occupied the home for at least 90 days to qualify for a Title I loan.
FHA borrowers who need an alternative to cash-out refinancing loans or other FHA refinancing options would do well to look into a Title I loan. Those who qualify may find the money they need for a large or small repair or improvement project on their homes.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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