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The Consumer Handbook provides important information about the MSHDA Home Improvement Loan Program. At the end of the Handbook is a checklist of items that you will need to bring with you to the community agency or financial institution when applying for a MSHDA Home Improvement Loan. |
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ELIGIBILITY REQUIREMENTS
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You may qualify for a Home Improvement Loan if: |
- You are buying your home or own it free and clear. You must also occupy the house that will be improved or one of the units if the property has two to four apartments.
- Your gross annual household income from all adult household members is under $74,750,700 (or $60,500 in certain cities).
- You have reasonable credit and the ability to repay the loan.
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DEALING WITH CONTRACTORS, BUILDERS, REMODELERS, OR CARPENTERS
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If you plan to use a contractor, builder, remodeler, or carpenter, you should ALWAYS get at least two estimates.
Choose a contractor with a reputation for honesty and good workmanship. There are several ways to check: |
- Hire someone who has established a good reputation and does the type of work you want done on a full-time, year-round basis.
- Ask your local Chamber of Commerce, the Better Business Bureau, local community building inspector, and/or the State of Michigan's Bureau of Occupational and Professional Regulation, Builder's Division. The Bureau's telephone number is 900-555-8374 (you will be charged for this call). All contractors, builders, remodelers, and carpenters must be licensed by the State of Michigan. Always ask to see licenses!
- Ask for the names and telephone numbers of other customers the contractor has worked for. Talk to them. Ask if they were happy with the work done.
- Stop by the place of business to see that the contractor is not a fly-by-night operator.
- Ask friends, neighbors, and relatives to recommend good contractors.
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COMPARING CONTRACTORS & BIDS
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| Always get more than one WRITTEN estimate! It is best to get two or three in order to compare prices. Doing this could save you money! The written estimate should also state if the contractor: |
- Will provide a final set of working plans and/or specifications for your approval before construction begins;
- Will allow you to make changes during construction if the changes are in writing;
- Will give you a complete, written warranty on the work and materials; and
- Will provide repairs if problems develop during the warranty period.
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Also, ask the contractor for proof that he has workmen's compensation and liability insurance.
The contractor must sign the MSHDA Contractor/Borrower Agreement (Form H-3). By signing the Agreement, the contractor states: |
- You will be protected from lawsuits if a worker is injured on the job.
- The contractor will provide lien waivers before being paid.
- In addition to any other warranties, rights, and remedies you may have, the contractor has agreed to correct any defects in workmanship and material up to two years from the date of the MSHDA Home Improvement Note.
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Never pay a contractor a large portion or the full amount of the contract before the work is done. If necessary, arrange for partial payments at the end of various stages of construction. Make the final payment only after the job is satisfactorily completed.
Never pay the contractor with cash.
MSHDA, is NOT a party to any agreement between you and your contractor and is not responsible for enforcing any such agreements. If you have problems with a contractor, consult an attorney, a legal aid society, your city or county building department, your local prosecutor's office, or the State of Michigan's Bureau of Occupational and Professional Regulation, Builder's Division (telephone number 517-241-9202). |
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QUESTIONS & ANSWERS
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| Q. Should I sign any contracts before I know that my MSHDA Home Improvement Loan has been approved? |
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| A. No. Depending on how the contract is written, you might have to pay for the home improvement even if your loan is not approved. |
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| Q. Can my builder help me fill out the MSHDA loan application? |
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| A. No. A contractor, builder, remodeler, or carpenter must NEVER help you complete a MSHDA loan application, quote interest rates, drive you to the bank, or contact the bank in your behalf. Only you as the borrower should be dealing with the bank (bank can also mean savings and loan or credit union). |
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| Q. The contractor who came to my house said he would cut his price if I signed right away. Should I? |
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| A. No. The contractor may have been trying to pressure you into making a snap decision. Always get additional estimates, and take your time in order to make the best choice. Also remember that under state law, you may generally cancel, within three days, a contract that was signed at your home. For specifics, contact your community agency or lender. |
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| Q. My carpenter is willing to start the work before my loan is closed. Should I let him? |
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| A. No. If MSHDA or the bank finds out that work was started before the loan was closed, your loan will be CANCELED. If you have an emergency situation and need immediate repairs, please contact your bank for assistance. |
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| Q. What do you mean by "waiver of liens"? |
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| A. Under state law a contractor, subcontractor, supplier, etc., may place a lien (a charge or claim) against property if he or she does not receive payment for goods or services provided. Someone holding a valid lien could foreclose, forcing you out of your home! Waivers of liens provide proof that the contractor has paid any subcontractors or suppliers. Ask your financial institution for more information. |
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| Q. How long should it take to get my loan approved? |
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| A. After all required information has been received by the bank, income and credit will be examined. If the information appears acceptable, the package will be sent to MSHDA for final review. Generally, within ten business days, MSHDA will give an answer to the bank. |
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| Q. Will I have to mortgage my property in order to receive a MSHDA home improvement loan? |
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| A. If the amount you borrow is over $7,500, you will have to mortgage your property. A mortgage pledges your property as security for the loan. |
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| Q. Can I get a home improvement loan if I am buying my house on a land contract? |
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| A. Yes. However, since you will not hold title to your home until the land contract holder is paid in full, the land contract holder is required to sign the mortgage if one is placed on the property. |
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COMMUNITY AGENCIES & FINANCIAL INSTITUTIONS
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Throughout the State of Michigan, many community agencies participate in the MSHDA home Improvement Loan Program. Check with a Participating Lender or Community Agent for an application. If your community participates, the people there will answer your questions and help fill out the loan application forms. Otherwise you can deal directly with one of the participating banks, savings and loans, or credit unions in your area. They will also answer questions about the loan program.
The following items must be submitted when applying for a MSHDA Home Improvement Loan.
Please take them with you to the community agency or bank that is helping you. If you can't find each item, or are not sure what is being requested, check with your community agency or financial institution for assistance. |
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LOAN APPLICATION CHECKLIST
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- Completed MSHDA application (H-1)
- Most recent one month's pay stubs, or proof of social security payments, or other proof of income/assistance Warranty deed (also land contract if applicable) Paid property tax receipts for the last three years Contractor's estimates and H-3
- Most recent year's income tax return with all schedules. Bring two years income tax returns if you have changed jobs in the last two years, are self-employed, are seasonally employed, or have rental income
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