Need to finance a home project

[Anonymous]

We need to finance a kitchen project in our home. We have an FHA loan (just refied) on our suburban townhouse. We are looking at a couple of credit unions and USAA for the loan. DH doesn't think we'll be able to get a home equity loan given the fact that equity held us back (and landed us in an FHA loan) at the time of our refi. He thinks we'll have to do this with a personal loan, which is fine, but we just need to know what to ask for, I guess.

I was wondering what any of you with more experience knew.

[Anonymous]

If you don't have equity over the lender's threshold, you probably won't qualify for a HELOC, or if you do, the rate may not be great. But see what the threshold is - you may be surprised and you may qualify. Rates are low in general right now - i was paying less than 3% on the HELOC I used to redo the kitchen and baths in a house I just sold. that's cheap money.

[Anonymous]

You may look into getting a FHA 207 rehab loan. They take into consideration the appraisal value AFTER the improvement so it's much easier to qualify. The (big) downside is that you have to jump through a lot of hoops - the bank pays the contractor directly, etc. - and many contractors will not work with this type of payment. But still might be worth a look.