ASSESSMENT FINANCING OPTIONS
As you are considering options for paying for the re-roofing and other capital repairs that are needed at Canterbury, you may want to consider getting a Home Equity Loan to pay for the HOA special assessment. However, there are several factors you should consider before deciding to go this route:
Approval and Eligibility: You’ll need to meet the eligibility criteria set by the lender for obtaining a home equity loan. This typically involves having sufficient equity in your home, a good credit score, and the ability to repay the loan.
Loan Terms and Interest Rates: Home equity loans often come with specific terms and interest rates. It’s important to carefully review the terms of the loan, including the interest rate, repayment schedule, and any associated fees. Compare these terms with other financing options to ensure you are getting a favorable deal.
Risks: When you use your home equity as collateral for a loan, you are essentially borrowing against the value of your home. If you fail to make payments on the loan, you could risk losing your home through foreclosure.
Alternative Financing: Before taking out a home equity loan, explore other potential sources of financing for the HOA special assessment. This could include personal loans or credit cards.
Another option could be a Home Equity Line of Credit (HELOC), a continuous, revolving credit line, instead of a Home Equity Loan, which is a lump sum of money paid off with fixed payments.
Quite often, Credit Unions offer better rates for loans. If you are not a member of the State Employees Credit Union, you may want to look at joining the Coastal Credit Union (open to anyone).
Tax Implications: Consult with a tax professional to understand any potential tax implications of using a home equity loan for this purpose.
Consult a Financial Advisor: It is always a good idea to consult with a financial advisor before making any major financial decisions. They can help you assess your financial situation and guide you toward the best option for your circumstances.
Possible Government Assistance for Those Who Qualify
“Fixing Up Your Home and How to Finance It – Title I Property Improvement Loan Program” https://www.hud.gov/program_offices/housing/sfh/title/sfixhs
In a nutshell:
The Title I Property Improvement Loan Program
If the equity in your home is limited, the answer may be an FHA Title I loan. Banks and other qualified lenders make these loans from their own funds, and FHA insures the lender against a possible loss. This loan insurance program is authorized by Title I of the National Housing Act.
FHA-insured Title I loans may be used for any improvements that will make your home basically more livable and useful. You can use them even for dishwashers, refrigerators, freezers, and ovens that are built into the house and not free-standing. You cannot use them for certain luxury-type items such as swimming pools or outdoor fireplaces, or to pay for work already done.
Title I loans can also be used to make improvements for accessibility to a disabled person such as remodeling kitchens and baths for wheelchair access, lowering kitchen cabinets, installing wider doors and exterior ramps, etc. Another use is energy conserving improvements or solar energy systems.
Improvements can be handled on a do-it-yourself basis or through a contractor or dealer. Your loan can be used to pay for the contractor’s materials and labor. If you do the work yourself, only the cost of materials may be financed.
Some of the advantages of the Title I loan insurance program are:
| You do not have to live in any particular area to get one of these loans. | |
| You seldom need any security for loans under $7,500 other than your signature on the note, and you don’t need a cosigner. | |
| You do not have to disturb any mortgage or deed of trust you may have on your home. | |
| To obtain a loan, you only need to own the property or have a long-term lease on it; fill out a loan application that shows you are a good credit risk; and execute a note agreeing to repay the loan. | |
| Your loan can cover architectural and engineering costs, building permit fees, title examination costs, appraisal fees, and inspection fees. | |
| You are not hampered by a lot of red tape. Usually only the lender has to approve your loan, and can give you an answer in a few days. When the work is finished, you will need to furnish the lender with a completion certificate. | |
| You receive some protection from the wrong kind of dealer, because FHA requires that any dealer who arranges a loan for you must first be approved by the lender. |