Profile picture for knrash

How to finance a remodel??

My husband and I are newlyweds and are anxious to buy a home when I graduate college in May. We're obsessed with HGTV and the elegant remodels they do on so-so homes...but where do they get 30-60k to remodel? Is it all cash they have saved up or is there a way to work remodeling funds into your home loan?
  • January 07 - Memphis
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Answers (8)

FHA 203k or a homestyle renovation would probably be your best option if you're NOT doing a cash out refinance. A renovation loan allows us to go with the potential value rather then the current value of your home before renovations. 

If you're working with an expert these loan options aren't hard to get approval on. If i can be of further assistance. Please let me know.


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Will 
  • January 08
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Profile picture for Julie Joyce
The best thing you can do at this time in your life is to create a relationship with a local bank. Introduce yourself to the president of the bank, the mortgage brokers & the tellers. 

I'm lucky that I've got such a strong relationship with my neighborhood bank, that every time the rates have dropped I've gotten a phone call. I'm always made aware of new products as well.

Ask them what they can do for you.
  • January 08
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There are specific loans out there that are geared towards renovation. These renovation loans cover the price of the home along with the costs of the renovation. This might be the type of loan that you are looking for. One particular loan is the FHA 203k loan. This renovation loan will allow you to purchase the house and covers costs for the remodeling. Keep in mind, you do not get the cash in hand directly to remodel your home. It is much more complex than that and requires documentation. Either way, the best thing for you to do is to speak with a lender directly to see if you can get started on financing with your situation. There are lenders like myself that would be glad to speak with you to help you get the loan that you need. Well I hope this helps! If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
  • January 08
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Hi Knrash - there are several options available to include remodel funds into the purchase loans. Some, but not all include the aforementioned 203k (streamline and FULL 203k), Homepath, HomeStyle, Seller funded Escrow accounts, our own personal reno product called the EZ Conv Rehab loan.
 
Each one comes with it's own set of rules and requirements and all do require a licensed builder/contractor to do the work.

These rehab loans are going to be based on after repairs value, not as is value.
  • January 07
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Profile picture for wetdawgs
The average home owner remodels in phases when their budget allows. 

If your budget allows and a lender will lend you the extra money, you can go faster.   But, budget carefully so you know what you can and can't afford.    Also be very cautious of over improving a home.   Remodeling rarely gives you a dollar for dollar return.  Over improving the home relative to the neighbors gives even less return.
  • January 07
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Profile picture for gator70
Slice the projects smaller. Use prosper dot com or lending club.
  • January 07
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There are loan programs available to help pay for the cost of improvements such as FHA 203k loans. These will allow you to finance in the cost of the construction. A great program! Depending on how much you need, there are two different types of this program. Please contact me in my profile if you have more specific questions. Good luck!
  • January 07
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Hello knrash,


What you're looking for is called an FHA 203k loan.  These are rehab loans that allow you to build the cost of improvements into the financed amount.  There's a whole bunch of extra hurdles and hoops to jump through to get this kind of loan, but it's the closest thing to what you're looking for that exists today.

Here's the bad news:  Every lender I know that offers this program requires all of the work be done by a licensed contractor.  You won't have the opportunity to fight with your husband about the correct measurements for the new counter that you want to install if you go this route.  All of the work will need to be estimated and completed by a licensed contractor.  All of the funds would go directly to them. 

Hope this helps! 


Thanks,
Aaron
  • January 07
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