Can i add more money towards my mortgage to renovate my house?
Saturday, June 19th, 2010 at
4:55 pm
Can i add more money towards my mortgage to renovate my house? How does that work? Do i get the money upfront?
I want to be a home owner by the end of the summer. I dont have good credit, but i know I can still get a nice house if i put a decent down payment on it.
My situation is simple. I want to get a inexpensive house, and do simple cosmetic renovations and upgrades. Is it possible if the house, for example, is $90,000 and i take out a mortgage for $120,000? Giving me $30k to renovate and upgrade my house? And if so, How does that work? Do i get the $30k upfront or what?
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The seller must agree to it and the lender has to approve it as well.
The lender will not lend you more than the home is worth because if you default they will have to sell the house for the amount of the loan. They won’t loan you more, so you have to buy a house for a very good price and have it appraise for much higher and then find a lender willing to loan you more than you owe on the property (loan on the equity, not the paid price). Not going to be easy now that underwriting rules are much tighter.
It works better if you buy a house, let it increase in value for a few years and then refinance for the new value getting the difference in cash. Your lender has to agree that you qualify for the larger loan and that your credit is worthy of the loan. They would also like to see someone with iffy credit live in the property for a time and make payments and improve credit scores.
Another way to do it is to get the main loan for the sale price and then apply for an equity line of credit. This is kind of like opening a credit card with your lender and is about the same as putting your $30,000 on your Visa card. Interest rates are based on prime, just like a credit card and interest accrues on the balance in the same way. It’s expensive and you are betting that your improvements will far outweigh any interest you will accrue and that you will sell the house fast. Interest will accrue fast, so it’s a bad bet if the real estate market is slow in your area.
Unlikely.
The lender will only lend what the house will appraise for. You may be able to obtain a loan, then get a Home Equity Line of Credit, but that assumes that you will have equity in it when you purchase. Most lenders have a limit of loan to value that they will allow. And you don’t get it upfront, you have a line of credit you can access as needed, but you only pay on what you owe. The downsides, the interest rate will be higher and there can be transaction fees attached each time you access that money.
Because of all the flipping shows, there has been a great deal of interest for homes that need simple renovations and upgrades, which is driving up prices for prospective property. So you will be competing for property with investors, contractors and professional flippers for homes.
Ja kunt u dit met een 203k rehab hypotheek doen FHA. U moet met een FHA erkende makelaar spreken die u door het proces kan begeleiden.
Detai van het programmal]Yes you can do this with a FHA 203k rehab mortgage. You need to speak with a FHA approved broker that can guide you through the process.
Program details here:]