Renovation finance 101
Hi, we are looking to buy a 2 BR apt that needs work (new kitchen, bath tiles, floor resanding, etc.). This would be our first buy. How do we go about financing a renovation? After we put down our 20% and closing costs, we will still have some cash reserves, but not enough to pay…
Hi, we are looking to buy a 2 BR apt that needs work (new kitchen, bath tiles, floor resanding, etc.). This would be our first buy. How do we go about financing a renovation? After we put down our 20% and closing costs, we will still have some cash reserves, but not enough to pay for the whole reno. Can we get a loan for that (assuming good credit, income, etc.)? How does this work?
Thanks!
Not building but 4-family home.. 🙂
203k Loan…. See link below for details like Eligible Properties, 203K Eligible Borrowers etc..
http://www.fha203kloan.com/
We used it when we were renovating our building.
In a coop the coop would have to approve the HELOC and would not normally approve anything above its requirements (if 20%, that’s it).
And bren is right: do floors, paint neutral — get to know the light at different times of day. and save for renovating later — you will be glad you did not rush into it.
Don’t coops have rules against home equity lines of credit? They don’t want you to put down less than their rules require. So, for example, if coop rules require 20 percent down, you’d have to put down more to qualify for the HELOC according to them. I think my coop had a rule like this, but I’m not sure.
Agree with painting before you move in, also. Though it may take you a while to choose the colors, do it before you move in anyway.
Definiitely paint and have the floors sanded before you move in… it’s affordable and really will give your new home a visual lift… then wait awhile, save, and do the kitchen and bathroom reno later on.
This govt program includes renovation costs in the mortgage. The 203k loan. Not sure about eligibilities but its worth checking out.
http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
With 20% down it is unlikely a bank will recognize any equity to secure another loan. It depends on the appraisal vs what you paid. Ask your mortgage lender what they think.
what mopar says, make sure you do the floor! Put it on your credit card! Once you move in you’ll never get another chance. Do the rest as you can afford it. And you can always upgrade appliances one at a time.
littley, mopar makes a good point. If the bath and kitchen is functional, I would do bare minimum (Floors and painting) and move in and you can save a little and do bathroom and kitchen while you live there. It’ll take some coordinating but I know people who have done it and even though they wished they did it before moving in, things didn’t go too bad, just were inconvenienced for a bit. I bought 2 years ago and was offer Home equity line of credit right with the mortgage but not sure how it is now with the current market. Speak to the bank you’re doing your loan with now and/or shop around.