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Started By
Message
Financing home purchase + renovation
Posted on 1/13/18 at 7:39 pm
Posted on 1/13/18 at 7:39 pm
Long story short, I recently purchased a house that needs about $100k in renovations. Combining the purchase price with the cost of renovations, I can easily afford that monthly payment. But I can't afford to come out of pocket for all of the renovations, given that most of my cash is going to the down payment on the house.
Question is: How will I be able to pay the contractor doing the renovation work? Is this two separate loans? Can they be combined? If I have options, what does the money talk recommend?
Question is: How will I be able to pay the contractor doing the renovation work? Is this two separate loans? Can they be combined? If I have options, what does the money talk recommend?
3
Posted on 1/13/18 at 9:21 pm to Dayman
Look up an fha 203k loan
eta - Have you already purchased the home? or just entered into a purchase agreement?
eta - Have you already purchased the home? or just entered into a purchase agreement?
This post was edited on 1/13/18 at 10:45 pm
Posted on 1/13/18 at 11:27 pm to Dayman
So are you looking to refinance? Have you closed already?
You can get a refurb loan, but if you need more then $30k or so it's gonna be a pita. If you have great credit and equity in the home already, it's possible the bank could keep the loan in house and basically hold it as equity themselves. In that situation they basically write their own rules, so you could loan the money straight from them for the work. I've done this type of loan before.
I'm going to warn you though, if you haven't closed yet and it 'needs' work outside of stuff you simply want to do then you need to hold off on closing until you get more info. Loaning money on a refurb is a pain in the arse.
You can get a refurb loan, but if you need more then $30k or so it's gonna be a pita. If you have great credit and equity in the home already, it's possible the bank could keep the loan in house and basically hold it as equity themselves. In that situation they basically write their own rules, so you could loan the money straight from them for the work. I've done this type of loan before.
I'm going to warn you though, if you haven't closed yet and it 'needs' work outside of stuff you simply want to do then you need to hold off on closing until you get more info. Loaning money on a refurb is a pain in the arse.
Posted on 1/14/18 at 12:16 am to Dayman
quote:
needs about $100k in renovations.
when you say needs does that mean to make it livable or to suit your taste?
I may be a contrarian around these parts but I would never borrow money for a update or refurb just for taste, if extensive repairs were required to make it livable I would keep it inside the initial mortgage see 403k comment above.
Fire away
Posted on 1/14/18 at 8:01 am to cave canem
quote:
when you say needs does that mean to make it livable or to suit your taste?
Ive only entered into a purchase agreement. This is my first home purchase. It doesn't necessarily "need" the remodeling, but the house is extremely dated. It will need extensive renovations to get it the way I want it. Talking total kitchen and bathroom renovations, with some moving of walls.
I figured I'd do the renovations before i move in, given that the purchase price plus total home renovation is within my budget.
I also have the option to have a family member finance the renovations with cash, then me pay them back in a lump sum. Problem is, not sure how I would get a loan to pay that back... Is a second mortgage an option?
For what it's worth, the house will be worth $50-75k more than the purchase price plus price of renovation after completion.
This post was edited on 1/14/18 at 8:07 am
Posted on 1/14/18 at 8:43 am to Dayman
quote:
Ive only entered into a purchase agreement. This is my first home purchase. It doesn't necessarily "need" the remodeling, but the house is extremely dated. It will need extensive renovations to get it the way I want it. Talking total kitchen and bathroom renovations, with some moving of walls.
I figured I'd do the renovations before i move in, given that the purchase price plus total home renovation is within my budget.
I also have the option to have a family member finance the renovations with cash, then me pay them back in a lump sum. Problem is, not sure how I would get a loan to pay that back... Is a second mortgage an option?
For what it's worth, the house will be worth $50-75k more than the purchase price plus price of renovation after completion.
See if you qualify for a 403k, best way to handle this IMHO
Posted on 1/14/18 at 10:46 pm to Dayman
Local Bank. 12 month interest only construction loan. They’ll loan up to 80% of renovated appraisal amount. Then convert to a conventional home loan.
Edited to reflect a clearer LTV description.
Edited to reflect a clearer LTV description.
This post was edited on 1/15/18 at 12:17 am
Posted on 1/14/18 at 11:29 pm to Golfer
quote:
Local Bank. 12 month interest only construction loan. They’ll loan up to 20% of renovated appraisal amount. Then convert to a conventional home loan.
This, my brother did this post flood. Local credit union was very easy to work with from what I saw.
Posted on 1/15/18 at 9:01 am to Dayman
Any reason you can't do kitchen initially and bathroom down the road, etc?
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