How much of a home equity loan will we be able to get?

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In 2001 my fiance bought our 3 bedroom ranch house for $ 80,000. At that time, our house appraised at $ 84,000. We have made improvements such as water softener & purifier(2001), new roof (2003), new tub surround & toilet (2004), new windows in master bedroom (2006), new carpet & tile throughout (2006), water proofed the basement (2010). We now owe around $ 55-60,000. We want to add onto the house, expand the kitchen/dining room, add a full bath, & add a bedroom. One contractor thinks it will cost $ 50-60,000 to do this. He makes around $ 55,000/yr. How much of a home equity loan do you think we’ll be able to get? If we can get a home equity loan, will we be able to keep it at 5% (which is the interest rate on our 15yr home mortgage)? If you don’t think we could get that much for an equity loan, is there some other loan we may be able to get?

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5 Comments
  1. Reply
    Age of Reason
    May 18, 2011 at 8:36 am

    About 25k. What you call improvements the appraiser calls maintenance. You have not increased the value of the home.

  2. Reply
    reenzz
    May 18, 2011 at 8:46 am

    No one could answer this until you have the home appraised. Depending on where you live, the home may be worth a lot less now that is was in 2001.

  3. Reply
    Pengy
    May 18, 2011 at 9:45 am

    First thing is to find out how much you really owe on the home. Did you have a down payment, and do you realize that most of your payments are interest? In other words do not deduct what you paid from the total owed, and if you financed 100% you now are only going to be able to get a loan to go up to 80% of your market value. Next get an appraisal to see what your home is worth. (You will need to do this anyway in order to get a loan) Because it appraised at 84k and you paid 80K the value at time of purchase was 80K. Hoe equity loans are always at a higher percentage than a regular mortgage so forget about the 5%, they have more risk. If your homes worth remained at 80K (many have lost value) then 80% of that is 64K. If you owe 60K then you could get a loan for about 4K.

  4. Reply
    acermill
    May 18, 2011 at 10:14 am

    As another said, the money you have sunk into this house is not going to raise its value. The ‘improvements’ you have listed fall under maintenance and won’t be worth one penny in terms of value increase. Until you obtain an appraisal for current market value, there is no way to know if you can get a HELOC. If the current value of your house has fallen to $ 60K, you won’t get anything.

  5. Reply
    Jena
    May 18, 2011 at 11:04 am

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