How can I refinance significant renovations/improvements in a new purchase?

[Anonymous]

I think we'd like to avoid an FHA 203k loan because sellers may find it too risky. So...situation is....fixer upper on the market for $450k... we can be approved for and easily afford a $600k house. Fixer upper probably requires $150k worth of work. Some things that would have to be done immediately - some things that could wait. Have 20% down for either the 450k or 600k. What is the best way to finance the renovations?

Thanks!

[Anonymous]

Anonymous wrote:I think we'd like to avoid an FHA 203k loan because sellers may find it too risky. So...situation is....fixer upper on the market for $450k... we can be approved for and easily afford a $600k house. Fixer upper probably requires $150k worth of work. Some things that would have to be done immediately - some things that could wait. Have 20% down for either the 450k or 600k. What is the best way to finance the renovations?

Thanks!

I would think about taking out a HELOC or Home equity loan after you purchase the house. Usually you can do it on 85-90% LTV. Do this after you get the home to avoid messing up the 20% down loan.

[Anonymous]

How much cash do you have right now? 20% on $450K is $90K, on a $600K house is $120K. So right from the get-go, if you buy the fixer-upper, you have at least $30K for immediate renovations. Then I'd ask your lender what sort of home equity line you could get for the $450K house if you put down 20% upfront. Say that's another $45K for the second round. Then you could religiously save the difference between the $360K mortgage+home equity and the $480K mortgage and use that for future work. Just one idea...