thirdgen

iTrader: (26)

Here's the deal. I am planning on doing an addition on my house, which may cost about $140,000 when it's all said and done. However, If I took out a home equity loan, I could probably get about $100,000 MAYBE.
I'll ask like this. Has anyone on here ever built an addition to their home that perhaps required funding for higher than the value of said home, but after construction was completed, would ultimately be worth the amount of investment? If so, how did you pull of financing?
I called my local bank and they told me if it's higher than the amount of a home equity loan, they could do a construction loan...(which will kind of crap on my current situation.)
Any advice/ suggestions?

TalkingPie

In my limited experience, if a bank isn't willing to loan you money for something, it's probably because it's not a good idea to do it.

3rdCarMX5

iTrader: (1)

I have had great luck with calling at least 3 different banks to find the best customer service and options, and asking that person what is possible. Products can also vary by bank. Once you know what is possible you can shop for price, and of course see if the loan agent who helped you can match pricing.

I think you could get a HELOC for the amount, and then refi when you complete construction. This will not be the cheapest option. Interest only monthly payments on 130k will be about $1100.

If you are looking for advice, I'll offer this: if you can't cover at least 50% of the cost with cash on hand, don't take on the project. Construction is never a smooth process and it will cost a lot more than you think. There is also the possibility that the addition does not initially return all of your money in increased appraisal value (what the bank uses to verify the value). Appraised value is always pessimistic.