Five Misconceptions about Home Improvement Lending

Are you and your members getting the most value from your home improvement lending program? It’s estimated that $280 billion will be spent on home improvement products in 2005.

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Are you and your members getting the most value from your home improvement lending program? It’s estimated that $280 billion will be spent on home improvement products in 2005 – a 3.5% increase over 2004.* If the following statements describe your underwriting guidelines, you may want to re-evaluate your home improvement lending programs.

1. LTV restrictions are based on the current value of the borrower’s home.

Allow your members to borrow up to 100% of the future improved value of their homes. This will provide them with more flexibility in choosing their improvements and you with more flexibility in providing the loan needed to complete the home improvement.

2. Lending is allowed for only owner-occupied dwellings.

Allow members who do not live in the home to receive lending funds. This type of underwriting expansion will allow landlords to make large-scale renovations and extensive repairs to help keep their buildings up to code. It can also provide needed funding for second home improvements.

3. Appraisals are always required.

Basic home improvement loan amounts, such as $25,000 or less should be verified by purchase price and stated value methods and not require an appraisal. The benefits to your members in receiving a loan that does not require an expensive and time-consuming appraisal can be substantial.

4. Home improvement loans should be capped at $50,000.

Not necessarily - lending up to $100,000 for home improvement projects gives your members the capital and flexibility they need to get an addition, renovation, or even major repair work finished quickly and with the best quality of materials. Members will be relieved that projects won’t have to be finished in stages or postponed due to dollar restrictions.

5. Members should have a minimum of four years home ownership and employment.

Neither of these stipulations need apply. These types of limitations may restrict many worthy members from obtaining the funds they need. Providing home improvement lending to new homeowners and newly employed members is a strong community service. Fifty-two percent of new home buyers have completed home improvement projects within one year of their purchase date.*

If you are limiting your home improvement lending by any of the above reasons, Old Republic Insured Credit Services, Inc. (ORICS) can help you expand your program to meet more member lending needs. We offer a variety of solutions for home equity and homeowner unsecured lending as well as home improvement loans or HELOC’s. ORICS has specialized in credit indemnity loss protection for over fifty years and has helped over 3,000 financial institutions manage risk and increase loan volume. For more information, call 800.621.7873 or visit the ORICS website at

* (Home Improvement Research Institute: “Recent Homebuyers Survey”, March 2004)

Building lending relationships for over fifty years…one insured loan at a time.



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April 4, 2005


  • Some new ideas from the credit union world!
  • Sounds like pretty basic stuff
  • Terrific article, good ideas, succinctly stated.