Client Financing In a Tight Money Market

It matters little if we are in a “slow down” or a full-blown “recession.” As contractors there’s little we can do to remedy the housing woes brought on by the subprime market, and frankly, time moves on. That said, regardless the belt-tightening in the mortgage market, we can be a conduit to money for our best clients. By best I mean someone that has a decent credit score, a job, and the things we normally look for in a well-qualified client anyway. So . . . for these homeowners that meet the qualifications and only need a relatively small loan, $25,000 or less, there’s good news . . . very good news indeed.

Here’s the skinny . . .

There’s a HUD program called Title I Home Improvement Loans that requires no . . . let me say it again . . . no appraisal and no equity. The Title 1 home improvement loan option is a second mortgage, but can be much more effective than a traditional home equity loan or the more restrictive conventional refinance program.

Insured by FHA, the loan is designed to give homeowners from the ability to finance the rehabilitation of a property; make improvements to a property; as well as the construction of non-residential buildings on an owner-occupied parcel of land.  Under the program, the amount financed can be used for either a single or multi-family property, and can have repayment terms of up to 20 years. 

Though the interest rate is negotiated with the lender and there maybe, probably are, origination fees and points, lenders don’t fall out of their chair trying to make these loans. They, lenders, just don’t make very much return on their investment, thus there aren’t all that many lenders that make them. Though I’m sure there are more, we have discovered one bank that does make these loans, and to my best understanding they are approved to make them on a national level. That bank is Domestic Bank out of Rhode Island (800- 533-8188 x394) and the contact person is Brent Morgan.

Ok . . . you the contractor, aren’t going to make anything from the lender should your client use the Title I program, but have this tidbit of knowledge about a “no curve ball” loan may make you the most attractive hammer swinger available for a client’s project.

This is just one of many financing options available to homeowners, but it may be the best option for homeowners that qualify. Knowledge is POWER!

Extra thanks to Kyle Dube of Project Plus Builders in Princeton, MA for the lead on this post.

Be a hero! Do what you say you’re going to do and stand squarely behind your work!