Buying A Home
Nechie122
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Home improvement loans
Tell me about your experience with home improvement loans -- did you use the same bank, what was the approval process like, what rates did you get?
We estimate that we want to add about $30,000 in improvements to our new house (including gutting the kitchen, recarpeting/refinishing the floors and painting). We could pay cash but that on top of the down payment would leave us with limited savings. DH is thinking of maybe financing at least half of it, so just curious what your experiences have been and what to expect.
We estimate that we want to add about $30,000 in improvements to our new house (including gutting the kitchen, recarpeting/refinishing the floors and painting). We could pay cash but that on top of the down payment would leave us with limited savings. DH is thinking of maybe financing at least half of it, so just curious what your experiences have been and what to expect.
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Re: Home improvement loans
I have never done this before so I could be wrong on this part but I believe they will not give you more money then the house is worth.
If your loan for the cost of the house is for close to the appraisal value they probably won't give you a loan for repair work on the house.
Have you already closed on the house? If not, you should ask your lender about doing a 203K streamline loan. If the improvements will cost less than $35,000 it might be an option. Like PP said, they won't lend you more than what the house would be worth with the improvements.
There is a LOT of paperwork involved and you have to find contractors who are willing to be paid several weeks after they complete the work. You'll want to ask them if they're willing to work with a 203K loan for payment.
We looked into doing this with one house, but it needed more than $35K plus our cash reserves. If the amount is more than that then you end up in a regular 203K which requires a special contractor and all kinds of crazy hoops to jump through.
The option that will be the least hassle will be to do some of the work with your savings and some of the work with a 203K streamline. I think if you take under a certain amount (I want to say $12K) out from the streamline they skip some of the paperwork.
So far it sounds like cash may be the way to go, and just do the minimum work we need to move in.
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Have you been there less than 12 months? I assume so but just wondered. We bought last June and spent approx $30k in cash to do similar renovations (plus electrical and plumbing). I just reached out to our lender to see if we could either refi to a lower rate and cash out some equity to finish our one large remaining project or to get a heloc. He said since the housing bubble burst, if you have lived there for less than 12 months than your "apprised price" will be your purchase price plus any documented renovations at cost. So to make a long story shorter, you won't have any equity to get a loan against for the first 12 months you love in a home regardless what the actual apprisals is.
So it sounds like you might be best to use your cash. We also found a 0% credit card just so we didn't spend every penny of our money. We'll pay off the card before the 0% expires but it makes me feel better to use our monthly cash flow to pay that off and not touch the remaining savings we have.
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