“Title 1″ loan vs. Home Equity Loan??
Question: I am considering taking out a loan on my house for improvements to it (i.e. building a garage). I do not yet have a significant amount of equity in my home. I have seen some information on the web concerning HUD’s Title 1 loans which allow for loans up to $25k without significant equity restrictions. I know there are also HEL’s out there that allow 100%-125% loans, but with higher interest rates. I would need to borrow ~100% of my equity. A few questions:
1) What are the average rates on the Title 1’s? Can’t find the information on the web and not sure if any of the local banks do them? A web search turns up interest rates of ~9.5% for 100% HEL’s. 2) Are Title 1 loan interest tax deductible (up to 100%). 3) If a Title 1 turns out to be a good idea, how do I go about finding a lender where I live(Charlottesville Virginia) or on the web? Do all lenders participate?
Answer: Call the company that holds your first mortgage and ask them about what kinds of HEL they offer — the bank that we have our mortgage with gave us an equity credit line for 6% for the first six months (that we are still in) and prime + 0 percent after that, for up to 100% of the value of our home (and we had less than 20% equity to begin with).
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Filed under: Home Equity Loan
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