Whatchwords for do-it-yourselfer: looks, cost, energy; New ways to fund improvements

Home-improvement loans may be much easier to find, especially during times of tight money, if two government-supported programs are a success. The Federal Home Loan Mortgage Corporation (FHLMC) launched a one-year, $200 million pilot program in January to buy home-improvement loans from lending institutions, thus enabling lenders to make more money available to the public. If satisfied with the results of the 12-month test, FHLMC says it will launch a full-scale program which could make billions of new dollars available in the future.

Another government-sponsored corporation, the Federal National Mortgage Association (FNMA), has come up with a similar multibillion-dollar program of its own which, if it gets a nod from the Reagan administration, could get under way by thefall.

If the FNMA (also known as Fannie Mae) program goes ahead, it would accept home-improvement loans not only with fixed rates but with adjustable rates as well.

The long-run impact of the two programs could mean good news for the homeowner. It could lead to lower interest rates on home-improvement loans because the primary lenders would have more money available to lend and the cost of money to lending institutions is cut.

Neither institutions deals directly with the public.

Meanwhile, there are many ways to finance a home-improvement project. However, no matter what method you choose, interest rates are sky high and a sharp jolt to anyone who hasn't been in the money market for a few years.

Whatever you do, shop around for funds as you try to get the best rate.

"Don't only shop for a workman or contractor," asserts Donald E. Miller, the FHLMC director of underwriting for the test home-improvement-loan program, "but shop for the lender as well."

There are plenty of money sources around, for example. You can go to a bank, savings and loan institution, credit union, or a finance company. Clearly, a finance company will make a higher-risk loan, but to compensate for the risk, the interest rates are higher as well.

Ask about special state-funded loans with lower interest rates for home improvements, recommends Mr. Miller. Some states have them although some of them may be energy related. In other words, the money is available only for improvements which will benefit the energy efficiency of the house.

Perhaps a contractor will provide the financing, assuming you don't do the work yourself or subcontract the job without the help of an overall contractor.

However, "you have to be very sure of the economic viability of the firm with which you are doing business," warns the Fannie Mae Guide to Buying, Financing, and Selling Your Home.

You can always refinance the house mortgage, but that alternative wouldn't make any sense if you have a low-rate mortgage.

Home-improvement money ranges pretty generally from 16 to 18 percent throughout the US. Some states, such as Arkansas and the State of Washington, have usury laws which clearly dry up any funds. Arkansas, for example, has a 10 percent rate ceiling and Washington State a 12 percent limit on conventional loans.

"Obviously," notes Mr. Miller, "if a lender is paying interest at 14 and 15 percent for money, he isn't going to lend it out at 10 or 12 percent."

Federal Housing Administration loans, however, are exempt from state usury requirements.

The maximum rate that a lender can charge under FHA's Title I program is 17 percent. In other words, a lender can charge what it wants to charge, but only up to a top of 17 percent. The maximum FHA loan is $15,000, but anything over $ 7,500 is required to be secured by a lien on the property.

Most improvements are accepted by the FHA except perhaps room air conditioning, outdoor fireplaces, swimming pools, and similar luxury projects. However, you can get an FHA loan for wall-to-wall carpeting provided the carpeting is going to be a permanent installation and will remain as a permanent part of the property when it is sold.

A rundown on home-improvement interest rates around the country indicates:

In the Northeast section the rate was 16.3 percent in December and 16.8 percent in January; Southeast, 15.79 and 16.21; North Central, 16.1 and 16.3; Southwest, 16.2 and 16.4; and the West, 16.3 and 16.6.

Some money prognosticators expect the rates to gradua lly soften as the year wears on.