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This isn't necessarily LI-specific, but I'm looking for advice on how to finance renovations for a fixer-upper (that happens to be on LI). We were hoping to buy the house and do some of the major repairs right away, but we're going to be cash poor after down payment & closing costs. Any suggestions?
I know there are government programs that allow you to take out a mortgage for the purchase price + cost of repairs, but you're required to hire a "construction consultant" and limited to using certain approved contractors. My husband is in the industry and we were hoping to save on the cost of reno by either doing it ourselves or "knowing a guy" [who is probably not on the approved list!].
I guess you can also get a separate loan just for renovations, but am I correct in assuming that no bank in its right mind would lend additional money to us after we take on a mountain of debt and have zero equity?
This isn't necessarily LI-specific, but I'm looking for advice on how to finance renovations for a fixer-upper (that happens to be on LI). We were hoping to buy the house and do some of the major repairs right away, but we're going to be cash poor after down payment & closing costs. Any suggestions?
I know there are government programs that allow you to take out a mortgage for the purchase price + cost of repairs, but you're required to hire a "construction consultant" and limited to using certain approved contractors. My husband is in the industry and we were hoping to save on the cost of reno by either doing it ourselves or "knowing a guy" [who is probably not on the approved list!].
I guess you can also get a separate loan just for renovations, but am I correct in assuming that no bank in its right mind would lend additional money to us after we take on a mountain of debt and have zero equity?
Cash. And I appreciate that after the purchase you'll be strapped to replenish savings, can you stagger out projects or is it THAT much of a fixer upper that you can't live there pre-reno?
Otherwise 203K would be your only option, Prospect Mortgage - Buy and renovate in one loan with only 3.5% down There's an office in Melville and a gentleman I highly recommend (he was excellent with our purchase, conventional mortgage though), send a message if interested. You will be restricted as to which contractors you can use, which will eat away at some of the savings vs. DIY.
People used to wait until they lived in the house for awhile, saved some money and built some equity. That's not how it's done anymore, apparently. Can you live with it the way it is for awhile?
The 203K process is a major headache - I had opted for that in a short sale purchase that eventually fell through. I had a lot of trouble finding contractors since most were tied up in other projects; then when we did find one, we didn't mesh well at all (and you don't want that in a contractor).
Also, you can't stagger projects in a 203K; you have to get it done in a certain amount of time, and it's highly recommended you have extra money on hand (I was told 15%), because there very well may be cost overruns after the initial estimate.
One more issue with the 203K: you'll find lots of lenders for one if it's under a certain threshold (it's called 203K Streamline and finances up to $35k). After that, it's more difficult to find lenders who will do the $35k+ 203K projects.
The 203K process is a major headache - I had opted for that in a short sale purchase that eventually fell through. I had a lot of trouble finding contractors since most were tied up in other projects; then when we did find one, we didn't mesh well at all (and you don't want that in a contractor).
Also, you can't stagger projects in a 203K; you have to get it done in a certain amount of time, and it's highly recommended you have extra money on hand (I was told 15%), because there very well may be cost overruns after the initial estimate.
One more issue with the 203K: you'll find lots of lenders for one if it's under a certain threshold (it's called 203K Streamline and finances up to $35k). After that, it's more difficult to find lenders who will do the $35k+ 203K projects.
The above is absolutely correct and the reason why we chose to cash finance our reno and split into two phases until we could cash finance the second half. All renovations have to be completed within 6 months and when we were exploring the product we called a few of the "approved contractors" for estimates and the two we met with- didn't suit us and didn't have time for us.
People used to wait until they lived in the house for awhile, saved some money and built some equity. That's not how it's done anymore, apparently. Can you live with it the way it is for awhile?
Gee now why didn't the OP think of that before he posted his question? Do you talk just to hear yourself speak?
This isn't necessarily LI-specific, but I'm looking for advice on how to finance renovations for a fixer-upper (that happens to be on LI). We were hoping to buy the house and do some of the major repairs right away, but we're going to be cash poor after down payment & closing costs. Any suggestions?
I know there are government programs that allow you to take out a mortgage for the purchase price + cost of repairs, but you're required to hire a "construction consultant" and limited to using certain approved contractors. My husband is in the industry and we were hoping to save on the cost of reno by either doing it ourselves or "knowing a guy" [who is probably not on the approved list!].
I guess you can also get a separate loan just for renovations, but am I correct in assuming that no bank in its right mind would lend additional money to us after we take on a mountain of debt and have zero equity?
Has anyone done this recently? Thanks in advance!
If your husband is in the industry, why not buy the house with a conventional loan, and renovate at your own speed? How bad is this place? My house was a complete gut. The only thing we saved was the funky but functioning bathroom. We got the electric brought up to code, insulated, sheetrock, spackle. Painted, finished floors. I didn't have a proper kitchen for 3 months, but I had a stove, sink, fridge, plywood temporary counters and file cabinets in lieu of cupboards. We had cardboard over the mud floor to protect it. We had a lot of friends help where possible. We bartered with our trades. Within 2 years everything which needed to be finished was done. The funky bathroom was replaced, a new roof, and a new oil burner installed. I would have loved to do it all at one time, but money would have been very tight.
Perhaps you should reconsider something that needs extensive repairs, will have zero equity, and leave you in a mountain of debt. You might love this house, but look really long and hard at all the numbers.
I guess your only option for now is the FHA203K. My husband and I are trying to get an FHA loan right now. They are telling us that FHA does not accept cash in my account just yet; so if I go by what my loan officer told me, I cannot use any cash I saved and only my paychecks.
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your joking ...right?
