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Old 04-19-2015, 07:40 AM
Location: High Bridge, NJ
3,858 posts, read 8,050,291 times
Reputation: 3317


I need $30K to add a bedroom and a bathroom to my home. We have no equity right now (we're about broken even on the mortgage)-but I've had an "after improvement" appraisal done based on the floorplans that shows the home will increase in value by $60K when the renovations are complete. So the idea would be to get an unsecured loan for $30K, pay interest only for the 4-6 months it would take to do the work (I'm doing about 80% myself) and then refinance to pay off the short term loan/existing mortgage and end up with about $30K equity (Home value of $280K, loan balance of $250K). Where should I be looking for financing?
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Old 04-19-2015, 08:07 AM
12,404 posts, read 9,195,957 times
Reputation: 8861
Could you get some of the work done by a company, and spend your time earning income elsewhere? A company might offer financing.

I'm a bit curious why you insist that the loan be interest-only? If money is really that tight maybe you should put the renovation off until your income improves.

Last edited by ncole1; 04-19-2015 at 08:22 AM..
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Old 04-19-2015, 08:16 AM
2,600 posts, read 5,442,327 times
Reputation: 2387
1. From reading your post, I would say that getting this type of loan, and I assume you what 100% wont happen.

2. Many lenders will only offer only 80% of project costs and in many cases, even less.

3. To even qualify, you'll need excellent credit for the lender to even talk with you.
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Old 04-23-2015, 04:28 AM
Location: Chesterfield, VA
1,218 posts, read 4,437,544 times
Reputation: 533
Try and get a cash-out refinance loan. The cash out would be used to pay the contractor. The only problem is you have to have a contractor that is willing to not get paid until the project is completed. We were able to do this for our addition.
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Old 04-23-2015, 05:05 AM
7,598 posts, read 17,614,249 times
Reputation: 8078
If you are doing a home improvement type loan, most lenders will want to put their nose into your rehab, and any many cases, vet who does the work. DIY is typically allowed only when the owner/rehabber holds a Class A license, and even then, sweat equity is rarely allowed, only the cost of materials.

You would be better off talking to a credit union for a signature line of credit (most likely not IO) and refinancing afterwards. Option #2 is a 203k rehab, but that is AWFULLY expensive way to go, but sweat equity can be allowed (as I understand, can't swear, I don't do those).

Option #3, contact Citizens RBS and ask then if they are doing a cperm rehab based off of improved value.
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Old 04-23-2015, 07:54 AM
Location: Phoenix, AZ > Raleigh, NC
14,297 posts, read 17,491,099 times
Reputation: 22118
Option #4: Get a second job, cut your budget to the bone, and save every penny you can. I predict this would be the quickest and easiest route to getting your reno completed.
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