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StarsStripes
LIF Adult
Member since 12/12 1192 total posts
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Does this exist?
Buying a new house and taking out a larger mortgage than the price of the home to do a renovation?
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Posted 5/11/17 8:20 PM  |
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Prudential Douglas Elliman Real Estate
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jamnmore
LIF Adult
Member since 6/16 989 total posts
Name:
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Does this exist?
I believe that it can be done but it requires a lot of paperwork. The suggested work would need to raise the value of the house to the amount of the loan if not more. And I think the loan disbursements are tied into the renovation schedule.
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| Posted 5/12/17 9:52 AM |
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lululu
LIF Adult
Member since 7/05 9511 total posts
Name:
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Re: Does this exist?
I think you can take out a separate loan for capital improvements. I feel like you might be able to do it with the mortgage but you should talk to a mortgage broker.
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| Posted 5/12/17 12:56 PM |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19458 total posts
Name:
L
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Re: Does this exist?
Posted by lululu
I think you can take out a separate loan for capital improvements. I feel like you might be able to do it with the mortgage but you should talk to a mortgage broker.
Yes, this is what I wanted to say. The other way to do it, is to not put as much down, or to take out a line of credit.
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| Posted 5/12/17 1:40 PM |
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MrsG823
Just call me Mommy.
Member since 1/11 5570 total posts
Name:
S
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Does this exist?
There is an FHA loan that is designed for buying a home that needs renovations: https://fhagovernmentloans.org/FHA%20Loan%20Programs/FHA%20203K%20'Fixer-Upper'%20Mortgage.htm
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| Posted 5/12/17 7:11 PM |
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chilltocam
LIF Adult
Member since 11/11 9141 total posts
Name:
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Does this exist?
I have heard of people taking out the mortgage and home equity loan/line of credit at the same time. Also, as pp mentioned, there is a certain type of mortgage that includes money for improvements - but I think only certain houses will qualify. Best bet is to talk to a mortgage broker.
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| Posted 5/14/17 11:13 PM |
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Re: Does this exist?
It's a renovation loan - the FHA has a product called a 203(k) loan. You can do a streamlined one if the renovations total between $5K and $35K (people have used it for things like painting, flooring, etc.). For more extensive renovations, the full 203(k) loan has more red tape (FHA planner involved, etc.). The house has to appraise as is and then for what it will be worth post-renovations. But I've had clients do the full 203(k) loan and it's not too bad to do. I think the renovation loan portion is taxed at a higher rate, though.
Other banks have their own version of the renovation loan product. I know for a fact that Wells Fargo does.
You should speak to your mortgage loan officer to get more info.
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| Posted 5/15/17 12:31 PM |
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