Hubby and had hoped to buy a bigger house last year, but with the housing market the way it is, no such luck. Our new plan is to do a massive addition on our current home. We most likely don't have much equity in the house due to this market, even though we put 20% down and make extra payments, so we will have to save the bulk of the capital we need to take out a loan.
For those of you who have done build projects, would you share with the type of loan you took out, how much equity you needed, how much cash you used to pay for things, and anything else that would help me plan? My brother did a build and ended up spending 80k in cash. He had lots of equity because he started his build before the bubble burst and he bought some years before we did. But I just don't see how we save 80k in cash and another lump of cash to make up for our lack of equity.
I need suggestions. I need more space, especially since we are probably going to have a third.
I believe it is free to prequalify at a bank. They could run your credit report, analyze your budget, and tell you what you are eligible for.
It is frustrating to work with a builder picking out your dream home's features only to find out you can't afford it. Good luck.
We were considering the same thing, so had both a building company and realtor come over and look at our place. we told the builder what we were considering and got some ballpark pricing ranges, depending on how big we went (just back, or back and up). Then we had the realtor give us an estimate of what we could sell for now. Unfortunately, the builders amount was way more than I expected! Just wanted to share in case you haven't actually worked with a builder yet. I was very surprised.
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I feel for you. I'm in the same situation. The only thing I did was call the bank to ask them what type of loan I could get. The person I spoke with thought maybe just a personal loan which has a high interest rate. I do need to pursue this so if you find anything out please let me know as I will do the same for you. Good luck.
I did an addition on my home 8 years ago. We put on a 2nd story on a one story house. I used cash for the 2nd story addition, then a home equity loan for the first floor redesign.
For you, this may require some back and forth between communicating with builders (and architects), communicating with banks and communicating with realtors/house assessors.
Regarding construction, concrete work is extremely expensive. We did not need to do any concrete work. We took off the roof and put on a 2nd story. Had we gone back or out to the sides of the house, the excavation and the concrete work would have added considerable cost. Possibly 25% or more (I don't have exact figures).
This will take some research on your part. Have an idea of what kind of addition you want to do, then talk with builders to get a sense of that cost, then talk to an appraiser to see what that will do to your house, and talk with a banker to see what's feasible.
Patience will be required. Best wishes. Living through construction is a whole separate topic =)
The last addition we did that was large, was in the 90's. We took out a 2nd mortgage. We've had other 2nd mortgages since then, but our house price has stayed stable, even though we've completely lost the money we put into the house. Meaning, we've not added anything to this house that would raise the value.
Anyway, in the 90's we added a room and a deck to the back of the house. We borrowed 25,000 for the projects on a house we payd 57,000 for. We sold the house for 85,000 a couple years later. Now, I have no idea what's allowed. A few years ago, 2nd morgtages could raise your borrowed amounts to 125% of the value of the home. But I doubt they let anyone go 25% over the market appraisal today. I've been wondering the same thing.
Remodeling never ads value. But room additions do. So if they can do area appraisals, then predict the added value of the project to the house, you may be able to borrow it as a 2nd mortgage. But I would suggest shopping around for a Heloc because the interest rates are so low.
It is much more expensive to build than to buy. We bought a lot in 2005, had plans made from an architect for 7k. The gas prices were over 4 dollars at the time. All of the supplies were more because of gas prices. We ended up selling the lot and buying a house in the same subdivision. It was going to be over 100k over budget if we built . If you really want to build just know what you are getting into. It's alot of time and headache. My parents have done it twice. My dad was there everyday for the whole thing so it is done right. I hope it works out for you =)
Also, the couple we sold the lot to did the same thing. They are still trying to sell the lot.
Sorry, i just realized you are doing an addition not building a house. Whew. Good luck . I'm sure you will be happy with the results!
I would recommend that you call Melissa Olson with First Centennial Mortgage @ ###-###-#### ext 307 or www.MelissaOlsonLoans.com. She is really good and will find you the best loan for your situation. She is a lifesaver!
