I purchasesd a house in Tacoma, WA back in May 2006 for $171k. I currently owe $168k. Based on the online appraisal my house is worth between $175k and $190k. I want to add a two car garage and do some home improvements for about $50,000. My equity is far short of the sum needed. Is there a way to do a new mortgage (with interest rates dropping) to include the price of the home improvements into the house? If there is could you please elaborate. Thank you in advance.
2007-11-01 17:13:43 · 5 answers · asked by The Government Mule 1 in Business & Finance ➔ Renting & Real Estate
No, not borrowing money against your house. I would suggest living without the garage for a couple of years. You could put a couple of credit cards together. Good luck!
2007-11-01 17:40:56 · answer #1 · answered by ziggymo2 2 · 0⤊ 0⤋
I respectfully disagree with the gentlemen re: 125% loan.
Even if you make these home improvements, there is no guarantee that your house will be worth that much more, because the market will only bare what it is willing to bare and you could be stuck with over improved property and not get out of it what you put into it.
If your going to keep the house long term, I would do a little at a time and pay as you go, but if you are only going to live there for about 5 years and then sell it. I would not borrow more than the house is worth. Also, an online appraisal may be okay, but I would be a little bit leary of this, because I would only make sure I was getting the best appraisal I could get. You need to shop around for appraisers. Banks and mortgage companies and HUD who could probably give names of reputable appraisers. Hope this is helpful.
2007-11-02 01:09:04 · answer #2 · answered by Sunny louise 4 · 0⤊ 0⤋
You could approach several banks and look for the best mortgage rates and terms you can get. Then you can go back to your own bank and ask for a re-mortgage of your house. If you currently only owe them 168K and the current market appraisal of your house is 190K, you should be able to get the 22K difference in cash if you re-mortgage your house, plus the possibility of a longer term and a lower interest rate, meaning a lower monthly payment. YOu can do improvements with the 22K cash in hand
2007-11-02 00:22:48 · answer #3 · answered by ACE 5 · 0⤊ 0⤋
No. You will not find a lender who is willing to lend you more than the current appraised value of the house in its current state. What you will need to do is try to obtain a 'construction loan' from a bank, and then make the needed improvements with the proceeds from said loan. However, you will face a problem once you are done with the improvements, because your improvements will NOT increase the value of the property dollar for dollar.
If you spend $50K on improvements and the finished appraisal only goes up $25K, where will you get the money to make up that other $25K shortfall when you attempt to refinance ?
2007-11-02 00:20:37 · answer #4 · answered by acermill 7 · 1⤊ 0⤋
Look for a 125 Loan. It's a loan for people with excellent credit. It allows you to borrow 125% of the value of your house. If house apraises for 190, you can borrow 237.5 which is 60K more than the 168 owed. Your interest rate will be higher, but since this is for home improvement, you can refinance in about a year and in a perfect world, the house would apraise for 240K (190K plus 50) and you'll have a better interest rate
2007-11-02 00:53:38 · answer #5 · answered by Paul W 2 · 0⤊ 0⤋