How to finance a remodel and addition?

Tips and Deals Forums Buying Your Home Buying a Home in Bay Area How to finance a remodel and addition?

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      Hi all-


      We recently purchased a small fixer-upper in a great neighborhood, with the plan being to remodel the interior and adding a bedroom and bath (it’s a 2/1). Even after doing this work we will not be even close to the largest, or fanciest, home in the neighborhood, and we still won’t have spent what it would cost to buy an equivalent home in the neighborhood.*


      My question is, what are the best options for financing this type of project? We had hoped we’d get a HELOC to cover some of it, but after some research we’re discovering that HELOCs are much harder to come by than they were last time I did a remodel–we put 20% down, and we’ve found many banks won’l loan more than 80% LTV, so, maybe not our best option. I’ve read about construction loans, or a “refinance and renovate loan” but I know very little about how they work or how difficult they are to get. We can come up with cash to cover a good portion of the work, but we’d prefer not to if at all possible–we purposely bought below our means (about $400k less than we qualified for) with the thought that we’d be adding another $150-200k in renovation loans to our monthly payment. We have excellent credit.*


      I’d really appreciate any help you can offer on the subject. Thanks!

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