April 17, 2009
How to obtain financing for remodeling a house that I just bought?
Vishal asked:
I am going to buy a fixer upper and want to customize the house as per my specific needs.
I am going to buy a fixer upper and want to customize the house as per my specific needs.
How do i obtain financing for the remodeling since I will have only 10% equity (which is the downpayment) in the house?
Does the remodeling company offer financing?
Can i get a loan from the mortgage company itself to remodel the house? I don't have equity in the house so if there is a provision to do something like this then can someone please explain it to me
Thanks
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Comments on How to obtain financing for remodeling a house that I just bought?
Have you already bought the house and get the mortgage yet ?
Before the financial melt down, this is how it go down.
Get a house with first mortgage with what ever down payment you have.
Obtain a second mortgage to withdraw your equity. Sometime the loan originator and homeowner and home appraiser / inspector or valuator will conspire to inflate the house value so the home owner can get 2nd mortgage that is beyond their equity.
Don't know if any bank will still play that game
Simply put the game is
1st mortgage for the value of house - the 10% down payment you put down
2nd mortgage for the 10 % equity (from your down payment)
thus 100 % financing.
or if you have good job . good credit . you might be able to get a signature loan. and do the remodeling.
then
Get another appraisal and a different mortgage loan to cover the newly remodeled house ( the value has just gone up because you remodeled it )
But you can also
just get the 1st mortgage and live in that house and take one project at a time. without taking out a big loan.
Maybe in a year or two you will be done .
Good Luck
You can talk to the mortgage company, or take out a personal loan, or use your own money…..
If you use a remodeling company, it will be very expensive….
When I remodeled my place, the only thing I paid for was the roof and the heat/ac..
Everything else, I either did myself, or traded cabinet making skills for…
call up all your friends and see what they know,…trade your abilities for theirs.. if you have to pay someone, it can mount up quickly…
First you can ask your remodeling company-they usually deal with credit companies and will help you to get financing. If you're located in IL,I can give you list of those companies.
If you're planning to do it yourself,just go to your bank and ask them about remodeling program for new home buyers.But if you work with professional construction company,bank will give you this loan much easier.
You have no equity on the house because you're only putting down 10% instead of 20% standard requirement.
The only option you have if you could find a contractor to fix your house wherein this particular contractor will put a second lien to your property which in the near future if you fail to pay, you can't refinance or sell it without settling your debt with them.
Your best bet is to fix it little by little without refinancing.