Home Remodeling - Grand Rapids,MI

Updated on November 14, 2012
J.R. asks from Geneva, IL
7 answers


We are considering buying a home that has HUGE potential but has been vacant and not maintained for about 4 years. It's in rough shape. We would get it at a great deal and it is not a foreclosure.

However. The house needs work before we would move in. Like a lot of work. How on earth do people finance these kind of remodeling projects? My lender wasn't super helpful - he said we MIGHT be able to get a loan (that would be approximately enough to do the outside, but not the inside) and there weren't really options for anything else.

We have money in the bank but not enough to do all of the work that needs to be done.

A home equity line of credit is not an option because we will be buying the home and have no equity in it.

Have you ever remodeled a home, and if so, how did you finance it?

If we can't figure out how to finance the remodel, we will probably have to pass on the house. It's in such disrepair that living in it and paying as we go is not an option.


Edited to clarify: If we paid asking price for this house, our monthly mortgage payments would be well under the maximum we could afford to pay monthly. The obvious solution is to buy the house and repair as we go. The problem is the house needs repairs to be livable. Bummer.

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answers from St. Louis on

In general it is a form of a construction loan, at least if I understand what you are talking about. When you say remodeling you are talking I don't like the kitchen, what you are talking about is the kitchen is unlivable.

What you have to do is show how much it will cost for the work and how much the home will be worth when it is done. So pretty much if you are paying cash for the home then you need someone to appraise the homes value when completed. You need to have contracts for what they work will cost. Then you can apply for the loan.

I am not sure if I worded that right but my brain shut down an hour ago.



answers from Seattle on

Your lender will probably not agree to the purchase anyways - and if they do I would question their business practices. What you can do is try to get a rehab loan: a loan that covers the purchase price and the remodeling. But that requires that you take out a loan for (much) more than the house is worth now.
No many banks go for that, especially if you are a first time buyer and/or if you don't put a CONSIDERABLE amount down.
You need to talk to your lender about what you can afford and stick with that. Remember that it is only a good deal if you can afford it.
Good luck.



answers from Philadelphia on

You can not afford this house. If you have a budget of say $300,000 then you need to be looking at fixer uppers substantially below 300,000 perhaps in the $210,000 range.
The first house we bought we qualified for double the amount of our actual mortgage. This allowed us to remodel the kitchen, bathroom, get new siding and window added a deck, new flooring through out etc.
Our current home we had built. This cost way more money than I would have thought although we did not have to do the upgrades before moving in. After we moved in we add ceiling fans, kitchen table chandelier, cabinets above washer/dryer, all storage shelves in basement and garage, paint throughout (we did not want builder grade off white) landscaping, patio, mailbox etc. Once again, we qualified for a much higher mortgage than what we actually got
My advice, look at less expensive houses in great neighborhoods so you can afford to make the changes you want. (Did you ever watch Property Brothers on HGTV?)
In my experience everything cost more than what you think it is going to cost.


answers from Boston on

I agree with Julie G. Home remodels have the crazy habit of costing more than you plan on - sometimes the contractors aren't good at estimating, and sometimes the preliminary work discovers a bigger problem (like pulling up a floor and finding termites or dry rot).

It's not such a great deal if the price is low but you have to add in $40,000 for repairs. You'd be better off buying a more expensive home that needs less work, and that extra $40,000 would be financed by the mortgage.

Good luck! Keep looking - there will be more houses out there!



answers from Chicago on

Hubby and I are planning on a massive remodel/build. We are saving. Our plan is to take out a loan and to pay with as much as possible with cash.

Since you currently do not own the home and it needs a lot of work, it's probably not a good idea to buy it unless you have cash at hand for most of the remodel. It's doubtful you would qualify for a loan to cover the remodel costs.

I found a house that sounds similar to the one you want. We had to pass on it because we couldn't afford the house and the remodel costs. I'm bummed, but I am sure there will be another opportunity in the future. It's best to be conservative with these things, or else you could lose your shirt -i.e. the house and everything else!



answers from Chicago on

If it has been vacant for 4 years I would have an inspector look at it first. There could be major issues because it hasn't been used in years. I would not buy it if I were you . Too many risks of problems and money wise it doesnt quite make since to buy.



answers from Wichita Falls on

All our remodels we have done ourselves while living in the house, but we have basic plumbing, electrical, tiling, painting, and dry wall experience (even roofed a house once). That can save you lots of money, but only if you know what you are doing. You can also be your own general contractor to save money. That means finding all your own labor, filing for your own permits, and coordinating men and supplies to be available at the right time. This takes time and research.
A lot depends on what what needs to be done, what you want done, what you are capable of doing, and what you will have to contract out. Do you have other lines of credit? or other assets that you can use for collateral (some retirement plans can be borrowed against)? If you are in a desirable location you may be able to get an equity loan after the fact to pay off higher interest lines of credit used during building once the job is done.

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