Final answer:
The most suitable finance option for a client needing $49,000 for renovations and having $25,000 in home equity could be an FHA 203k loan, which is tailored for home renovations. However, a Home Equity Line of Credit could also be considered, depending on various factors such as interest rates and the homeowner's credit situation.
Step-by-step explanation:
If a client has $25,000 of equity in her home and needs $49,000 to replace her windows and pipes, the housing counselor should recommend the most fitting finance option based on the client's needs and financial situation. An FHA 203k loan is designed for home renovation and repair costs, allowing a homeowner to borrow money for both the purchase or refinance of a home and the renovation costs under one mortgage.
A Home Equity Line of Credit (HELOC) is another option, giving the homeowner the flexibility to borrow against their home equity, pay off the balance, and borrow again up to the credit limit. Considering the need for substantial renovation funds, such as in this case where the costs exceed the home equity, an FHA 203k loan may be the most suitable choice, especially if the homeowner does not have significant equity in their home. However, the final recommendation should take into account the client's creditworthiness, interest rates, and other qualifying conditions.
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