Educational Consumer Tips

Home Improvements -- FHA Loan Advertisements

Author: Better Business Bureau

The following is BBB general information.

Be leery of advertisements misrepresenting FHA-insured loans. These ads, often headlined with "public notice," may mislead and confuse homeowners by the impression that homeowners can only participate by using the home improvement firm listed in the advertisement. This isn't true. According to the FHA, the Title I Loan Program is not new and is open to application by any homeowner USING ANY HOME IMPROVEMENT COMPANY OR LENDER. 

No home improvement company is acting as an agent of the federal government in connection with the Title I Loan Program. Understand that no home improvement company can lend FHA money per se; the money must come from a third party lending institution. Monthly payments are not fixed but are dependent upon loan terms. There is a credit screening process and homeowners who default are subject to foreclosure. Some contractors may advertise, for example, "$53 a month," but exclude the number of months or total contract price. 

 Remember, make sure to comparison shop prices by getting bids from three different home improvement firms for labor, materials and warranties. New York State Law regulates the sale of home improvement goods and services and applies to most types of home improvements costing more than $500 purchased by homewoners, co-op owners and tenants. The contract must contain a cancellation clause that states: the customer has the unconditional right to cancel the contract until midnight of the third business day after the date of signing.

For more information, contact: 

Better Business Bureau
100 Bryant Woods South, Amherst, NY 14228
(800) 828-5000 

This report is general in nature and is not intended as a Business Review on any company, service or product.