How do you finance a new home purchase & renovation?
I am looking to purchase my first home. I am a first time home buyer so I can qualify for what we call in CT CHFA for a reduced mortgage rate. My question is the home I am looking at needs probably about $40-60K of work. The home is listed for $184K. Would I take a mortgage out for $250K to purchase & renovate the home? or Do I take a mortgage out for $184K for the home & then a separate $60K loan for the renovations. I am not positive how this works.
- Anonymous4 years ago
You need to pay 10-20% down plus closing costs and pre-paids just to buy it. So you'll need about $25-40k just to buy the house.
At that point in time, if you need money for remodeling, you wait until the house has appreciated such that you can take out a home equity loan (or refinance) or you save your cash and pay for your own improvements. Or if you're stupid you could max credit cards and/or borrow from your 401k.
Mortgages are secured loans. There is no "security" for the lender if the house is worth less than the amount borrowed.
- JudyLv 74 years ago
Neither. Probably WON't work, unless you have a lot of cash saved, and maybe not even then since most lenders won't give a mortgage on a house with much wrong with it. And they're not going to lend you more than its current value. Look for a different house.
- BobLv 74 years ago
They will NOT let you take about a mortgage for more than the house is worth so the best would be the $184K, but in actuality it will be less than that because you need a 10% - 20% down payments. IT is HIGHLY unlikely that you will also then be able to borrow ANOTHER $60K to remodel that house.