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Old 05-21-2010, 09:45 AM
 
11,642 posts, read 21,630,704 times
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My husband and I are considering purchasing a home that needs work. We are approved for a mortgage up to $850K as long as the LTV on the mortgage package does not exceed 80%.

We are considering updating the floors, putting in impact glass windows, updating the kitchen cabinets (the rest of the kitchen is quite nice), and adding a pool. We would also love to expand by about 1,000 SF (add media room, laundry room, 1.5 bathrooms). The project would add to the value of the house and the house is in an area with many nicer homes on 1 acre lots so there is no danger of "over improving".

We can probably pay $75-100K cash for the improvements and need financing for the rest.

Are there loans for this type of thing where the appraisal is done based on the projected improvements?
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Old 05-21-2010, 10:23 AM
 
Location: Plano, Texas
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You could get a home improvement loan as a 2nd mortgage.
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Old 05-21-2010, 11:07 AM
 
11,642 posts, read 21,630,704 times
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Quote:
Originally Posted by VictorBurek View Post
You could get a home improvement loan as a 2nd mortgage.
Understood, but will I be able to get a loan based on the future appraised value?
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Old 05-21-2010, 11:18 AM
 
Location: Laguna Niguel, CA
768 posts, read 4,138,732 times
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Only from a lender who has a "rehab" or "construction" loan program. The most popular type of rehab program is FHA's 203k 1st mortgage loan program, but it's limited to FHA loan limits (which are less than $850k). When you are dealing with non-conforming jumbo loan programs a lot of the niche rehab/construction programs are no longer available.

Victor's suggestion of getting a 2nd mortgage could potentially go up to 85-90% of the home's current appraised value. If that'll do the trick it is strongly recommended to go that route rather than seek out a rehab/construction lender, as rehab/construction programs need to approve your architecture/engineering plans, materials, and contractors, adding time and potentially complications to the loan approval process. Getting a 2nd mortgage that isn't based on a projected value comes down to you being able to qualify, and doesn't review any plans/contractors.
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Old 05-21-2010, 11:25 AM
 
11,642 posts, read 21,630,704 times
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Quote:
Originally Posted by ShanetheMortgageMan View Post
Only from a lender who has a "rehab" or "construction" loan program. The most popular type of rehab program is FHA's 203k 1st mortgage loan program, but it's limited to FHA loan limits (which are less than $850k). When you are dealing with non-conforming jumbo loan programs a lot of the niche rehab/construction programs are no longer available.

Victor's suggestion of getting a 2nd mortgage could potentially go up to 85-90% of the home's current appraised value. If that'll do the trick it is strongly recommended to go that route rather than seek out a rehab/construction lender, as rehab/construction programs need to approve your architecture/engineering plans, materials, and contractors, adding time and potentially complications to the loan approval process. Getting a 2nd mortgage that isn't based on a projected value comes down to you being able to qualify, and doesn't review any plans/contractors.
Thanks.
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