Comments on: I want to purchase a small fixer upper and pull out the equity for a remodel? http://www.homeimprovementproducts.net/blog/home-improvement/i-want-to-purchase-a-small-fixer-upper-and-pull-out-the-equity-for-a-remodel/1325/ Home improvement products, techniques and ideas Thu, 01 Jul 2010 11:12:08 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Rush is a band http://www.homeimprovementproducts.net/blog/home-improvement/i-want-to-purchase-a-small-fixer-upper-and-pull-out-the-equity-for-a-remodel/1325/comment-page-1/#comment-1326 Rush is a band Mon, 08 Feb 2010 08:39:33 +0000 http://www.homeimprovementproducts.net/blog/home-improvement/i-want-to-purchase-a-small-fixer-upper-and-pull-out-the-equity-for-a-remodel/1325/#comment-1326 <a href="http://mycaffeinatedcontent.com">Caffeinated Content</a> Here's the real problem you are going to have. You will buy a house that is very close to it's real value. It will be cheaper because it is in poor condition. You need money to bring the condition of the property up to bring it's value up. The bank won't lend on 'future value' or 'future condition' because they have no way of guaranteeing that you'll put the money into the house. If the house is worth $250,000 and you have a mortgage out for $225,000 (90%), they aren't going to lend you very much. From the bank's point of view they aren't going to lend you another $75,000 (exceeding the value of the house by $50,000) because you could take that $75,000 and, essentially dissapear. The other issue that you may have is that home values are still dropping in CA. If you bought a house today for $300,000 and waited a year to get a home equity loan, your house might only be worth $270,000, making it tough to borrow money from it. One way to do it is to improve it very slowly and start with the things that you can afford on top of your mortgage payments. Do it all yourself (learn how to do it right). After a few minor projects you may have improved it enough to increase it's value. If that is too slow, another (very, very risky) way to do it would be to borrow the money on a credit card, do the improvements and hope that the completed project would appraise high enough to get that equity loan and pay your credit cards off with the equity loan (not, not, not recommending that you actually do that). good luck! also home equity lenders are no longer going up to 100% of the value like they used to do. They want you to have some 'skin in the game' so to speak - a financial incentive and anchor to the house. Caffeinated Content

Here’s the real problem you are going to have. You will buy a house that is very close to it’s real value. It will be cheaper because it is in poor condition.

You need money to bring the condition of the property up to bring it’s value up. The bank won’t lend on ‘future value’ or ‘future condition’ because they have no way of guaranteeing that you’ll put the money into the house.

If the house is worth $250,000 and you have a mortgage out for $225,000 (90%), they aren’t going to lend you very much. From the bank’s point of view they aren’t going to lend you another $75,000 (exceeding the value of the house by $50,000) because you could take that $75,000 and, essentially dissapear.

The other issue that you may have is that home values are still dropping in CA. If you bought a house today for $300,000 and waited a year to get a home equity loan, your house might only be worth $270,000, making it tough to borrow money from it.

One way to do it is to improve it very slowly and start with the things that you can afford on top of your mortgage payments. Do it all yourself (learn how to do it right). After a few minor projects you may have improved it enough to increase it’s value.

If that is too slow, another (very, very risky) way to do it would be to borrow the money on a credit card, do the improvements and hope that the completed project would appraise high enough to get that equity loan and pay your credit cards off with the equity loan (not, not, not recommending that you actually do that).

good luck!

also home equity lenders are no longer going up to 100% of the value like they used to do. They want you to have some ‘skin in the game’ so to speak – a financial incentive and anchor to the house.

]]> By: kemperk http://www.homeimprovementproducts.net/blog/home-improvement/i-want-to-purchase-a-small-fixer-upper-and-pull-out-the-equity-for-a-remodel/1325/comment-page-1/#comment-1325 kemperk Fri, 05 Feb 2010 19:20:50 +0000 http://www.homeimprovementproducts.net/blog/home-improvement/i-want-to-purchase-a-small-fixer-upper-and-pull-out-the-equity-for-a-remodel/1325/#comment-1325 <a href="http://kansieo.com/">Caffeinated Content</a> YOUR query is the stuff of which very happy and very mad people are dealing with; my refi loan took 6mo to complete. MOST lenders [3 yrs ago] would not consider a re-fi till I owned the house 1 yr. So, it is only what a lender will do. ASK your mortgage broker to ask at least 25 lenders. and do not pay for any fees out of your pocket! [I stupidly did] Caffeinated Content

YOUR query is the stuff of which
very happy and very mad people are
dealing with; my refi loan took 6mo to
complete. MOST lenders [3 yrs ago]
would not consider a re-fi till I owned the
house 1 yr.

So, it is only what a lender will do.
ASK your mortgage broker to ask
at least 25 lenders.
and do not pay for any fees
out of your pocket! [I stupidly did]

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