Home Improvements using a HUD Title 1 Home Improvement Loan and Mass Save Energy loan

Our house being re-roofed

If you've purchased a home that needs a wee bit of work, but you don't have equity (umm, because you just purchased it), here is a nifty loan that can help.  In my case, we purchased our house at the height of the market, and the price still hasn't recovered to the point where we have enough equity to do an equity line of credit.  I had written a post previously about a 203k loan which bases the loan on the projected finished value of the home.  However, few homes have sold in my neighborhood and those that have needed A LOT of work (one was marketed as a tear down!).  On paper, the finished value of my house did not support the work that I wanted to do.  Whats a gal to do?

I searched for loans that do not require equity and stumbled upon the HUD Title 1 Home Improvement loan.  It sounded too good to be true.  The maximum loan on a single family house is $25,000 and can be used for building alterations, repairs and site improvements.  Now here is the best part, there is no home inspection or appraisal!  The loan is secured by your home (like a second mortgage) but they do not consider the equity that you have in your home.  The only catch is that you need good credit, and of course your income must be sufficient to support the loan.

The paperwork was so easy and streamlined that I honestly wondered during the process if it were some kind of scam.  I checked out the bank and could find nothing nefarious so we went ahead with the loan.  From the time we applied, to the time we closed, was 10 days.  10 DAYS I tell you.  And we were never asked for the same piece of information more than once. The attorney came to our house, at OUR convenience, to do the closing.  We have 6 months to make the repairs (or ask for an extension) before an inspector comes out to verify that the work was done.  Easy Peasy.  The loan officer we used is John Rodriguez, Admirals Bank, Office #401- 248-7267, Mobile #401-439-6236, 15 Park Row, West Providence, RI  02903.

I can't believe that more banks don't offer this.  In fact, many loan officers that I spoke with don't even know that the program exists.  We used it to finance a new roof, some work to our chimney and to fix rotted trim boards.

Is there a downside?  The rate is higher than a traditional refinance.  I'm not sure how it compares to a home equity loan though.  However, we combined this with a 0% long term loan from the Mass Save Energy program to get the rest of the work that we wanted done.

If you live in Massachusetts, I highly recommend getting a MassSave Energy Audit.  If for no other reason, you get free light bulbs.  Our audit revealed that our house was 10 TIMES more drafty than a modern house. It's no wonder we've been hemorrhaging money to pay for our oil heat.  They identified some easy, low cost ways to improve our energy loss, like insulation in cracks, door sweeps, and changing out light bulbs.  And they identified some more involved work like converting to gas and changing out windows (ours are NOT original, but are the result of a 1940's renovation).  

Click here for a pdf report by the National Trust 

for Historic Preservation

Preservation Green Lab Report

A note about windows, if you have original windows in your historic home - keep them if you can!  People are often worried about energy loss, but the truth is, studies show that you can get near to, or equal, the energy efficiency of modern insulated pane windows by adding good quality storms on the exterior or interior of the window.   And few things change the character of your house as quickly as removing the original windows.  For great information on energy efficiency of historic windows, click this link to a post by California's Office of Historic Preservation.  I am disappointed that the MassSave Energy program does not allow for a 0% loan if you are restoring your windows - only for replacement.

Sitting here with a light snow on the ground, it's hard to believe that within a couple of months, the daffodils will be poking their heads out of the ground accompanied by the sweet sound of buzzing saws and nail guns : )