The Real Estate Encyclopedia
How Are Home Improvement Loans Secured?
Category - Mortgage Questions - Refinancing FAQ's

Home improvement loans are secured by a first or second lien position on a primary residence and include the filing of a Mechanics and Material Men (M&M) lien. All home improvement loans must result in permanent changes to the existing residence and are subject to credit approval.

 

Home improvement loans allow borrowers to increase the value of their existing homes, resulting in higher resale value and added attractive value to buyers.  Interest on a home improvement loan is generally tax deductible.

 

Some of the terms of a Home Improvement Loan include that the property to be improved must be the applicant’s primary residence, and work cannot begin, nor materials be delivered until funding takes place.  To allow for a right of rescission, the borrower will receive the loan proceeds on the fourth business day after the loan closing process takes place.

 
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Mortgage Questions - Refinancing FAQ's
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