We want to buy a home for about 140,000, and invest about 40,000. Can we get a loan for the home AND the renovation?
2007-02-04 06:10:44 · 2 answers · asked by gg 7 in Business & Finance ➔ Renting & Real Estate
Yes, you may ask about construction loans.
2007-02-04 06:33:31 · answer #1 · answered by smh60437 3 · 0⤊ 0⤋
What you'll need to consider is if the property will appraise at $180,00 after the renovation. When you purchase the home you'll finance $180,000 and cash out $40,000 at closing for the reno. Plan B would have the first at $140K and a second or a HELOC at $40K.
The lender will only carry the paper if the home's value can cover the note if you default. You say "about $40,000" but that could easily turn into $50K or $60K. The best plan is to:
1. Work with your realtor for a competitive market analysis for the home and the neighborhood.
2.. Get a thorough home inspection to ensure there are no surprises (plumbing, termites, roof, electrical, plumbing, etc.). If there have been any mods to the home you should know the previous work was performed to code.
3. Bring in professionals to provide estimates and a detailed scope of work for your renovation. Ask for timelines and milestone payments - DO NOT pay 100% up front!
4. Decide if you are going to occupy the house during or after the renovation.
After you have done all of these things, you can go to your banker with a written game plan and documented proof of the home's before and after value potential.
Get to work and good luck!
2007-02-04 08:24:05 · answer #2 · answered by Bayne 2 · 1⤊ 0⤋