Close

See current mortgage rates on Zillow Mortgage Marketplace

Profile picture for user0315216

Home Equity Line vs. 203k Loans

We may have an opportunity to purchase a home in the coming few months. We recently toured the home and discovered that while it generally appears in good condition (e.g., new roof, newer mechanicals), we feel it is also in need of some renovations to make it suitable for us, primarily replacing the carpets and flooring.

We would also like to make a few additional improvements (e.g., painting, opening up a wall, updating kitchen, etc.), after closing and prior to moving in, aproximately an additional $20K - $25K, above the agreed upon sales price of the property.

Assuming we were able to agree to purchase the home for $180K, is it possible to get financing for these funds, and if yes, what is the best way to finance an additional $20K in improvements? We expect to make a 3.5% down-payment that we will borrow from relatives and have been pre-qualified upto $275K. The home will be our primary residence though we own another home in another state that we currently rent. We would prefer a 30 year mortgage and ask to have the seller pay closing costs, finance them or pay them using proceeds from relatives.

Thank you for your assistance!




  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
May 23 2012 - Fayetteville
We think we've answered this question for you!
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
 
 

Answers (1)

I never want it to be said that I'm not looking out for a consumers best interest because this statement certainly won't appeal to my fellow loan consultants in the industry... 

If you can get 20-25k cheaply via your home equity line and it's at a relatively low rate, it's probably best to go that route and close with a standard FHA loan on your new home.  If you don't have a lot of equity on the line or you'd prefer not to use it, the 203k is still an excellent option at 0.25-0.375% above standard FHA rates.

I just wrote a 4-part primer on rehab loan options, I won't spam the 4 posts here (post size limit) but you're free to read it here:

http://www.zillow.com/advice-thread/203K-Loan-Possibility/433665/

You'll want to scroll down a bit, there are some self-promotional posts above mine (or sort by most recent).  In case at some point the link is deleted, you can search for "203k Loan Possibility" in the zillow search field and you'll find the same thread.

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 05 2012
 
Related Questions
Home Equity Line vs. 203k Loans
Profile picture for Rob Weber
Latest answer by Rob Weber
June 05 2012 | 1 answers
Mortgage Rates
 
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 413 Runnymede Dr, Fayetteville, NC Home For Sale
    413 Runnymede Dr, Fayetteville, NC 28314

     For Sale: $169,900

    • Beds: 4
    • Sqft: 1950
    • Baths: 3.0
    • Lot: 9000
  2. 328 Pinecrest Dr # 84, Fayetteville, NC Home For Sale
    328 Pinecrest Dr # 84, Fayetteville, NC 28305

     For Sale: $192,500

    • Beds: 3
    • Sqft: 1390
    • Baths: 2.0
    • Lot: --
  3. 2823 Marcus James Dr # 32, Fayetteville, NC Home For Sale
    2823 Marcus James Dr # 32, Fayetteville, NC 28306

     For Sale: $239,900

    • Beds: 4
    • Sqft: 2563
    • Baths: 3.0
    • Lot: --