Home Improvement Loans

Home Equity Loans are one of the most valuable products available to homeowners today. Using the equity in your home to make home improvements is a smart move -- rates are typically lower than credit cards or home improvement suppliers and the interest may be tax deductible.


Many factors go into the decision to approve a home equity loan and although you currently have a mortgage, things may have changed that would impact the approval process. The price of homes in your neighborhood, the current condition of your home, a job change which may have impacted your monthly income and your other debt are all things that can change over time. Therefore, the process of borrowing against the equity in your home is very similar to obtaining your first mortgage requiring an updated appraisal, proof of income and verification of your credit score.


Step 1 of 5 – Estimating your Project Cost

Knowing what improvements you want to make and understanding the cost is the first step in getting it started. Use our handy Home Improvement Calculator to obtain an estimate of your project costs. You will also receive an estimate of your Home Improvement Loan monthly payment so you can understand the impact on your monthly budget. The next step is to determine if you can borrow the amount necessary to complete your project.



Click here to access our Home Improvement Calculator


Step 2 of 5 – How much can I afford to borrow?

The following calculation can be used as a guideline to determine how much you can afford to borrow. Your monthly gross income (income before taxes) and your debt load are used to determine how much you can borrow. Your loan payment plus your monthly debt (not including your household expenses such as heat and electric) should not exceed 30% of your monthly gross income. Use our handy calculator to help you determine your maximum monthly loan payment.


Click here to access our Home Equity/Mortgage Qualifier Calculator


Step 3 of 5 – Finding the right Home Equity Product

A Home Equity loan may be the right solution provided you have sufficient equity in the home to cover the project costs. Some choices are yours to make; others are based on specific circumstances such as:


Click here to view First Citizens Community Bank Home Equity Products


Step 4 of 5 – Applying for your Loan

You can apply for your home equity mortgage loan by contacting a lender or you can apply on-line. A lender will contact you if you apply on-line. You will be asked to provide a list of information to your lender so they can proceed with your loan review and approval:


Print Check List

  • Paystubs for all applicants for the prior month
  • W-2's for all applicants for the most recent tax year
  • Tax Returns for all applicants for the prior two years
  • Bank statements for prior two months for all deposit accounts and the last quarterly statement covering any investments listed on the application including retirement accounts
  • Copy of signed purchase agreement
  • Copy of driver's license for all applicants
  • Copy of social security card for all applicants
  • Divorce Decree (if applicable)
  • Alimony / child support documentation (if applicable)
  • Death Certificate (if applicable)
  • If a refinance, a copy of the most recent year's tax bills (spring and fall)
  • A copy of the homeowner's insurance policy if refinancing or prior to the closing if purchasing a new home

Disclosures

Within 3 days of application, you will be provided with several documents:

  • Truth In Lending Disclosure – provides information about the proposed loan such as the annual percentage rate, total finance charges and total payments.
  • Good Faith Estimate – Lists your closing costs. This is provided to give you some idea of the approximate costs you will need to pay at closing. Such costs could include interest adjustments, title insurance, recording fees, points, credit report fees, appraisal fees and settlement fees which are paid to the lawyer or firm who manage settlement.
  • US Department of Housing and Urban Development (HUD) booklet to assist you in understanding closing costs and the Truth in Lending Disclosure.

Appraisal and Inspection

Your appraisal will be ordered by the bank. The appraisal is an evaluation of the property's value and is completed prior to the final loan approval to ensure the loan amount is consistent with the value of the property. The appraiser visits the house and evaluates the site, structure and physical condition of the property. The final appraisal amount also includes an evaluation of recent selling prices of similar homes in the area (often referred to as "comparables"). The process can take up to two weeks.


An inspection may be required as a result of something found during the appraisal process.


Title Search

The title search is a step to uncover any possible problems with the legal ownership of the property such as a lien or faulty land survey. Arrangements for the title search are made by the bank. A one-time fee is paid at closing.


Approval and Commitment

Upon receipt of a satisfactory appraisal and title search, your lender will contact you with the final approval. A commitment letter will be issued at this time.


Step 5 of 5 - The Closing

The lender will establish the closing date. Before closing you should review all loan documents. You will receive your check as part of the closing process.


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