U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 01-30-2018, 07:31 PM
 
2 posts, read 839 times
Reputation: 17

Advertisements

I am looking into purchasing a home that has been in my family for years. It has been vacant for over 10 years and will need, what I assume, a complete rehab. The purchase price will be around $40,000 and updated homes in the neighborhood sell in the $170,000 range, so there is plenty of wiggle room to get the house updated. I have looked into the FHA 203(k) loan, but I would like to do a lot of the work myself. Are there any other rehab loan options available with a credit score in the low 600ís? Other suggestions to financing renovations? Does such a thing exist as a Home Equity Loan based on potential value of the home? Thanks!
Reply With Quote Quick reply to this message

 
Old 01-31-2018, 06:59 AM
 
Location: MID ATLANTIC
7,580 posts, read 17,575,884 times
Reputation: 8060
Unless you hold a Class A contractor's license, no bank will lend for Harry Homeowner to do the work on his own. Perhaps some painting here and there, but not for anything requiring a permit. Find a contractor you can work for (and willing to expose him/herself and their license and insurance). The percentage of homeowner fails is just too high to risk. Borrow against 401, get a gift, but I think you are going to have a hard time finding money.

Lending against future value is for the pro's, and even then, they still need to put their own skin in the game).
Reply With Quote Quick reply to this message
 
Old 01-31-2018, 07:38 AM
 
2 posts, read 839 times
Reputation: 17
Quote:
Originally Posted by SmartMoney View Post
Unless you hold a Class A contractor's license, no bank will lend for Harry Homeowner to do the work on his own. Perhaps some painting here and there, but not for anything requiring a permit. Find a contractor you can work for (and willing to expose him/herself and their license and insurance). The percentage of homeowner fails is just too high to risk. Borrow against 401, get a gift, but I think you are going to have a hard time finding money.

Lending against future value is for the pro's, and even then, they still need to put their own skin in the game).
Thanks for the feedback. That makes sense regarding the banks hesitation. Would it be possible to get the house signed over to me then take out an initial home equity loan (say $40,000) and invest that into home to get the electrical/plumbing/hvac etc. updated. Once complete I would assume the value of the home would increase and as would my equity in the home. Then take out a second home equity loan to pay the family member for the house as well as finish renovations.
Reply With Quote Quick reply to this message
 
Old 01-31-2018, 09:58 AM
 
2,735 posts, read 1,473,348 times
Reputation: 2120
Quote:
Originally Posted by maa801 View Post
Thanks for the feedback. That makes sense regarding the banks hesitation. Would it be possible to get the house signed over to me then take out an initial home equity loan (say $40,000) and invest that into home to get the electrical/plumbing/hvac etc. updated. Once complete I would assume the value of the home would increase and as would my equity in the home. Then take out a second home equity loan to pay the family member for the house as well as finish renovations.
If the current value of the (abandoned, mind you) home is relatively low, meaning you need to put ~80-100K of work into it to make it worth 170K, I don't see how you would be able to get a HEL of 40K.

I would be interested in hearing how this might work.

cheers
Reply With Quote Quick reply to this message
 
Old 02-01-2018, 09:47 PM
 
Location: MID ATLANTIC
7,580 posts, read 17,575,884 times
Reputation: 8060
Quote:
Originally Posted by maa801 View Post
Thanks for the feedback. That makes sense regarding the banks hesitation. Would it be possible to get the house signed over to me then take out an initial home equity loan (say $40,000) and invest that into home to get the electrical/plumbing/hvac etc. updated. Once complete I would assume the value of the home would increase and as would my equity in the home. Then take out a second home equity loan to pay the family member for the house as well as finish renovations.
Banks only offer mortgage or helocs for habitable properties (for the non construction loans). The home is the collateral. They would have 0 interest in that property should they have to foreclose.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top