 |
|
 |
 |
|
|
Forum
-> Household Management
-> Finances
|
amother
OP
|
 Tue, Nov 07 2023, 9:07 am
I own a small house and we bh outgrew it. I am in a very good location and was told in my area you are better off extending your house vs buying a bigger one. I am in middle of drawing plans with an architect.
I am currently paying 3.25 percent on my mortgage so I don’t want to completely refinance and lose that rate. I want to take out another thirty year loan on top of what I’m
Currently paying.
My house is currently worth about 800k and I owe around 450. The extension will cost around 500. I know I need to speak to a banker but I want to have some idea of my options of how to finance this. I did a lot of googling but I’m still don’t have a handle on this.
Did you make a big addition on your home? Did you take out a construction loan, heloc, home equity loan etc. any advice of what to do or what not to do is appreciated. Thanks.
| |
|
| Back to top |
 0
 1
|
|
amother
Poinsettia
|
Tue, Nov 07 2023, 9:12 am
|
Can you afford the addition? Will you be able to pay back loans for it?
| |
|
| Back to top |
0
1
|
|
amother
Cinnamon
|
Tue, Nov 07 2023, 9:15 am
|
| Back to top |
0
0
|
happy7
|
Tue, Nov 07 2023, 9:24 am
We took out a home equity loan.
You have to have documentation that you can actually pay for the loan.
It took us a year to get all the paperwork done.
We didn’t have the documentation of earnings that we needed to get the loan
We only took out $180K.
| |
|
| Back to top |
0
0
|
|
amother
Valerian
|
Tue, Nov 07 2023, 9:25 am
You basically only have the option to take out a home equity loan which is also known as a second mortgage. I've looked into it recently.
Construction loans r loans where they will release portions of the loan based on how much of your construction is complete and they only release the full amount when your construction is done, at which point it turns into a regular First Mortgage & you close.
Refinancing will require you refinance the whole loan which I would not recommend if you have such a low rate on most of your loan.
A home equity line of credit is a little bit different. You open up a line of credit of let's say $100,000 and it's open for a certain amount of time let's say 5 years. I think the rate can go higher up to a certain number in case rates continue to rise and they can also fall if you're lucky. Depending on the contract it will Define finalized when the line of credit closes or depending on whether you keep paying back and taking out more money.
Let's say you take out $50,000 but then you pay back $10,000 b4 it closes, you can then take out 60k.
I took out a small home equity loan recently and the rate was extremely high but because the amount was small it wasn't a stretch for us.
Obviously, all these home equity loans are only based on your actual home equity having gone up since you last refinanced and you having an available amount of equity in your property. From what you said it doesn't sound like anyone would offer you more than 350 and with closing costs that you would have to pay it would probably end up being closer to 335.
The other thing to keep in mind is that many times the maximum terms in home equity loan could be 10 or 15 years which makes your monthly payment even higher. I would not advise you to do it if you do not have income to spare.
My loan is 200k, 20 yrs & my rate is over 8%. We r paying almost 1900 for it, on top of our regular mortgage.
However, our income is close to 7 figures bh and we have been paying back extra and plan to repay back well before the 20 years.
| |
|
| Back to top |
0
3
|
|
amother
OP
|
Tue, Nov 07 2023, 10:21 am
| amother Valerian wrote: | You basically only have the option to take out a home equity loan which is also known as a second mortgage. I've looked into it recently.
Construction loans r loans where they will release portions of the loan based on how much of your construction is complete and they only release the full amount when your construction is done, at which point it turns into a regular First Mortgage & you close.
Refinancing will require you refinance the whole loan which I would not recommend if you have such a low rate on most of your loan.
A home equity line of credit is a little bit different. You open up a line of credit of let's say $100,000 and it's open for a certain amount of time let's say 5 years. I think the rate can go higher up to a certain number in case rates continue to rise and they can also fall if you're lucky. Depending on the contract it will Define finalized when the line of credit closes or depending on whether you keep paying back and taking out more money.
Let's say you take out $50,000 but then you pay back $10,000 b4 it closes, you can then take out 60k.
I took out a small home equity loan recently and the rate was extremely high but because the amount was small it wasn't a stretch for us.
Obviously, all these home equity loans are only based on your actual home equity having gone up since you last refinanced and you having an available amount of equity in your property. From what you said it doesn't sound like anyone would offer you more than 350 and with closing costs that you would have to pay it would probably end up being closer to 335.
The other thing to keep in mind is that many times the maximum terms in home equity loan could be 10 or 15 years which makes your monthly payment even higher. I would not advise you to do it if you do not have income to spare.
My loan is 200k, 20 yrs & my rate is over 8%. We r paying almost 1900 for it, on top of our regular mortgage.
However, our income is close to 7 figures bh and we have been paying back extra and plan to repay back well before the 20 years. |
Thanks. Don’t most home equity loans require you to still have 20 percent ownership in the house. If that’s the case I can’t even take out the 350. At the current rates, I am comfortable borrowing 500k only if l have a 30 yr pay back. Do you know if it’s
Difficult to find that?
I really really don’t want to completely refinance because then I would lose my current 3.25 rate. My only other idea to come up with the 500 is to ask my parents to take out a home equity loan and I’d make the monthly payment for them.
I am bh able and to pay back a Loan of 500k if I can get a 30 year term. My issue is getting the 500….
| |
|
| Back to top |
0
0
|
|
amother
Dandelion
|
Tue, Nov 07 2023, 10:33 am
Your best bet would be to go into a small bank such as TD for a HELOC
They can offer better rates than the typical mortgage banks for primary loans.
You can also talk to a mortgage broker to see if he can get you a HELOC.
One more option, for additional expenses, is to get some 0 APR credit cards. Depending on your credit you can get $50 to 100k.
You pay the minimum due and the rest does not accure interest for X amount of time. Some people transfer the balance to another 0 apr card when the term expires. I don't know anything about that.
Edited.
| |
|
| Back to top |
0
1
|
|
amother
Vermilion
|
Tue, Nov 07 2023, 10:36 am
|
Best to go to the bank that you bank with or local bank since they have the best heloc rates. Most mortgage people do not deal with helocs.
| |
|
| Back to top |
0
0
|
|
amother
Valerian
|
Tue, Nov 07 2023, 10:40 am
| amother Dandelion wrote: | Your best bet would be to go into a small bank such as TD for a HELOC
They can offer better rates than the typical mortgage banks for primary loans.
You can also talk to a mortgage broker to see if he can get you a HELOC.
One more option, if you can't get 500k (which you probably can't) is to get a some 0 APR cc. You pay the minimum due and the rest does not accure interest for X amount of time. Some people transfer the balance to another 0 apr card when the term expires. I don't know anything about that. |
Most credit cards don't hv 500k limits.
| |
|
| Back to top |
0
2
|
|
amother
Valerian
|
Tue, Nov 07 2023, 10:42 am
| amother OP wrote: | Thanks. Don’t most home equity loans require you to still have 20 percent ownership in the house. If that’s the case I can’t even take out the 350. At the current rates, I am comfortable borrowing 500k only if l have a 30 yr pay back. Do you know if it’s
Difficult to find that?
I really really don’t want to completely refinance because then I would lose my current 3.25 rate. My only other idea to come up with the 500 is to ask my parents to take out a home equity loan and I’d make the monthly payment for them.
I am bh able and to pay back a Loan of 500k if I can get a 30 year term. My issue is getting the 500…. |
I did not find 30 year. I found 1 20 year with a higher rate.
And most helocs are not 500k.
Many max out at 50 or 100.
Highest I've seen was about 200.
| |
|
| Back to top |
0
0
|
|
amother
Dandelion
|
Tue, Nov 07 2023, 10:48 am
Oh for sure not. You're right, I should've specified. It's a an option for smaller numbers, an top of whatever she can get on a HELOC.
| |
|
| Back to top |
0
0
|
|
amother
Aquamarine
|
Tue, Nov 07 2023, 11:31 am
|
I don't have what to add here but I'm wowed that your extension will cost you 500k. we are looking into a pretty large extension and not being so cheap will officially cost generously 350k
| |
|
| Back to top |
0
2
|
|
amother
Cinnamon
|
Tue, Nov 07 2023, 11:32 am
| amother Valerian wrote: | You basically only have the option to take out a home equity loan which is also known as a second mortgage. I've looked into it recently.
Construction loans r loans where they will release portions of the loan based on how much of your construction is complete and they only release the full amount when your construction is done, at which point it turns into a regular First Mortgage & you close.
Refinancing will require you refinance the whole loan which I would not recommend if you have such a low rate on most of your loan.
A home equity line of credit is a little bit different. You open up a line of credit of let's say $100,000 and it's open for a certain amount of time let's say 5 years. I think the rate can go higher up to a certain number in case rates continue to rise and they can also fall if you're lucky. Depending on the contract it will Define finalized when the line of credit closes or depending on whether you keep paying back and taking out more money.
Let's say you take out $50,000 but then you pay back $10,000 b4 it closes, you can then take out 60k.
I took out a small home equity loan recently and the rate was extremely high but because the amount was small it wasn't a stretch for us.
Obviously, all these home equity loans are only based on your actual home equity having gone up since you last refinanced and you having an available amount of equity in your property. From what you said it doesn't sound like anyone would offer you more than 350 and with closing costs that you would have to pay it would probably end up being closer to 335.
The other thing to keep in mind is that many times the maximum terms in home equity loan could be 10 or 15 years which makes your monthly payment even higher. I would not advise you to do it if you do not have income to spare.
My loan is 200k, 20 yrs & my rate is over 8%. We r paying almost 1900 for it, on top of our regular mortgage.
However, our income is close to 7 figures bh and we have been paying back extra and plan to repay back well before the 20 years. |
Curious, if you make close to 7 figures, then why would you need a loan ?
| |
|
| Back to top |
0
3
|
|
amother
Broom
|
Tue, Nov 07 2023, 11:48 am
|
We recently did a large addition, our house was worth much more than the mortgage amount we owed. So we got an appraisal and refinanced our original loan and took out one larger loan consisting of the remaining amount plus another 300k toward construction. This was almost 2 years ago when the rates were lower than they are now. Reach out to FM Loans, they were super helpful in getting us the best rate and the best terms. (and this way was cheaper than a Heloc or construction loan would’ve been)
| |
|
| Back to top |
0
0
|
|
amother
Hotpink
|
Tue, Nov 07 2023, 11:51 am
| amother Aquamarine wrote: | | I don't have what to add here but I'm wowed that your extension will cost you 500k. we are looking into a pretty large extension and not being so cheap will officially cost generously 350k |
How many square ft. are you looking to add?
Are you redoing kitchen? adding bathrooms?
Curious what you are getting for a quote of 350?
| |
|
| Back to top |
1
1
|
Arep
|
Tue, Nov 07 2023, 3:54 pm
You're saying your home is worth 800k and you owe 450k? The only way to finance the full 500k is with a construction type loan that looks at the future value, otherwise you're leveraging above 100% of the value. Which means refinancing the existing mortgage...
You could get a home equity for $500k, but unlikely for more than a total of 80% combined loan to value.
| |
|
| Back to top |
0
0
|
|
amother
Vermilion
|
Tue, Nov 07 2023, 4:11 pm
| amother Broom wrote: | | We recently did a large addition, our house was worth much more than the mortgage amount we owed. So we got an appraisal and refinanced our original loan and took out one larger loan consisting of the remaining amount plus another 300k toward construction. This was almost 2 years ago when the rates were lower than they are now. Reach out to FM Loans, they were super helpful in getting us the best rate and the best terms. (and this way was cheaper than a Heloc or construction loan would’ve been) |
This worked in last couple years and always best bet is to speak to a mortgage professional but rates are in 7% -8% range and probably won't make sense. And FM Home Plans is THE BEST!
| |
|
| Back to top |
0
1
|
|
amother
OP
|
Tue, Nov 07 2023, 4:23 pm
| Arep wrote: | You're saying your home is worth 800k and you owe 450k? The only way to finance the full 500k is with a construction type loan that looks at the future value, otherwise you're leveraging above 100% of the value. Which means refinancing the existing mortgage...
You could get a home equity for $500k, but unlikely for more than a total of 80% combined loan to value. |
Yes, my home is worth 800k and I owe 450. I am dreaming of not refinancing because I don’t want to lose my current 3.25 interest rate.
Does fm home loans deal with construction loans and home equity loans at all or just financing and refinancing?
| |
|
| Back to top |
0
0
|
|
amother
Bone
|
Tue, Nov 07 2023, 4:23 pm
|
We’re planning on taking out a construction loan.
| |
|
| Back to top |
0
0
|
|
amother
Blushpink
|
Tue, Nov 07 2023, 4:29 pm
|
| Back to top |
0
0
|
|
Imamother may earn commission when you use our links to make a purchase.
© 2024 Imamother.com - All rights reserved
|  |
 |
|
 |
|
|
