Profile picture for Zevin and Zegan

Where to start on a large home remodel?

I want to do a large remodel to my home -> Large addition, new kitchen, etc.  I know that I will need to get a construction loan, but I'm really now sure the best approach to move forward.  I have excellent credit, no debt (except my home loan).  I have ~20% equity in my home and I'm agressively paying down my mortagage (making double payments each month).

I have read online that I will need to work with an Architect or Design/Build firm to get plans in place in order to get a loan - my concern is spending a lot of money on a design that I won't be able to get a loan for. Based on my research (and some high-level discussions with one Design/Build firm) I'm thinking I'm going to need a loan for ~$300K to do the work I want.  Zillow says my house is currently worth $450K (I'm surrounded by $1M homes).

Any advice on the best way for me to move forward on this project would be greatly appreciated.

Thanks!
  • May 25 2013 - South Juanita
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Answers (9)

All the advice below is good advice.    I would look at what type of remodel you could do - would it look appropriate for the neighborhood or would it look like a remodel.   Would it be able to sell for a large percentage of what you are putting in adding the square footage, finishes etc?       With the best architect, designers etc. it is a large feat to accomplish - but if your home is a style that can be remodeled easily without appearing like a remodel years down the road then approach it in steps -  first bank preapproval - then architect design/permits etc. then build.   You are likely looking at a 18 month to 2 year process.   

  • July 28 2013
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Hello - we are general contractor for $1M homes in Dallas, and I would DEFINITELY recommend starting by getting approved for the loan. As long as you know the remodel is possible within your city limits (which is sounds like you've done your research on that), you want to secure funding for the project before paying for plans and designs. Depending on the architect/builder that you choose, these plans can be VERY expensive, especially for this size remodel. And you are right - 8 years from a remodel will be at least double the price. You only want to invest in plans once you are committed and cleared to go on this because you're going to end up paying for the plans either way. I've seen architects charge $20,000 for whole house renovations of this caliber.
  • June 14 2013
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Profile picture for rocktavio
This is a great question and one that I need an answer for as well. I to cannot find the house I want in my current neighborhood so I considered remodeling but my home is so old that it basically cost too much... And now I am considering demolishing the house and starting from scratch. So I too would need a construction loan. How do you find out if you will qualify and for now much prior to investing in the design et cetera... I already spent $1500 exploring remodeling options only to bid them out and realize it was not the route for me.
  • June 09 2013
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Start with your local planning and zoning department and see if the addition of space is possible. Find out about setbacks and permits. Locate utilities to make sure that they don't need to be relocated. See if there are CC&R's that put restrictions on design and or construction. If clear to build- site plan, financing, licensed general contractor, permits, build, appraisal, refi.
  • May 26 2013
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Profile picture for Zevin and Zegan
Thanks for the suggestion, but I've spent the past few years looking at upgrade options (new houses) and there are no good options in our neighborhood (which we love - great schools, parks, neighbors, short commute to work, on a cul-de-sac with open green space across the street that can never be built on, etc.) - please understand my plan to remodel isn't a spur of the moment decision, it has been years in the making after weighing all our options - a large renovation is the direction that makes the most sense for my family. As two people have mentioned my double payments, my plan is to use the money I'm currently making double mortgage payments on to pay my construction loan... From a financial perspective, I see it as a wash - I either buy a bigger house in a worse location borrowing at least $300-$400K more in the process (to get the size of house I want in a location close to my current location) or I remodel and get exactly what I want, exactly where I want it for the same cost (using very conservative construction costs). Obviously more pain in a remodel, but you know what they say - no pain no gain... Again, not to be rude, but I'm really hoping someone can help me with my original question! :) Thanks!
  • May 26 2013
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Save the double payment and forget about the dream of a lengthy home renovation project. Sorry if this sounds harsh but sounds to me like upgrading to a bigger home would be the best option for you. There are too many risks involved in the size of the renovations that you are proposing. Sounds like your current home is an easy sale at a premium price. Hire a Realtor and sell your home. Save yourself the time and aggravation and buy the home that fits your needs.You can build new or buy a larger resale home for less money and be moved-in in less time than you can do a design-build renovation.

  • May 26 2013
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Oh and my current interest rate is 3% fixed.
  • May 26 2013
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I'd like to take advantage of the historically low interest rates - I'm paying $3K extra a month on my mortgage, I'd need to save for 8 years to pay for a $300K remodel in cash - assuming remodel costs don't go up in the next 8 years which is unlikely - also the whole point of the remodel is to give my 3 and 5 year olds a larger house to grow up in...sort of defeats the purpose to wait 8 years to do this. As banks will find when they run my credit and see my work history and salary, I'm as low a risk as they will find for this type of loan... I appreciate the advice - but what I'm really trying to find out is if I should start my remodel by talking with banks and trying to line up a loan or if I have to start by paying for architectal plans before I know if I can get a loan or not - I'm hoping to avoid the situation where I spend $5-$10k on blue prints but am unable to get a loan to build the plans due to banks not giving out any remodel loans.... Hope this question makes sense. Thanks!
  • May 26 2013
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What is your current interest rate?  Would it be better to quit paying double payments and save the money of the extra payment each month and pay cash for the remodel?  I see many times over where people do a big remodel on credit and then I am listing it as a short sale after the work is done.  Just another thought.
  • May 26 2013
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