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Old 03-09-2012, 02:58 PM   #1
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What's the best way to refi in order to conduct home repairs?


I'm in a pickle. I bought my house three years ago this month, and while we love it, several semi-major problems have popped up. Last spring, we had to demolish our downstairs bathroom due to a flood caused by a leaking sump pump line. It had some previous water damage and we weren't willing to live with a smelling, nasty, moldy basement bathroom. We knocked it out in anticipation of rebuilding it shortly after with steel framing or something rather. well, that hasn't happened. For the last year, I've been having issues with the HVAC. First it was the furnace which I fixed when we bought it, then the outside unit fan went bad, fixed that and discovered it might have one more season left, then this winter I've been battling multiple furnace issues to the tune of a few hundred bucks. It's a 1983 Rheem and it might be 60% efficiency. Then there is the sagging garage wall issue, along with a breaking/broken garage door. Estimates on a new door installed are around $1000 not including fixing the sagging wall. I also need to replace a couple of windows and a couple of doors. There is also a sewer gas problem in the upstairs bathroom because it's not vented correctly.

Ugh.

So, after only three years of ownership, making the payments consistently, I wonder if I have a chance in heck of even getting a refi or line loan. I figure I will need a minimum of 12 grand just to make repairs and replace the HVAC and garage door and rough-in a new downstairs bathroom. While my credit isn't the greatest, I don't have late house payments or car payments and I have made a few improvements since I purchased the home (fixed backyard drainage problem and built a new front porch).

I'm with Well's Fargo, and I don't have any beef with them, so I'm wondering if I should just try to go thru them. their options are-

Refi and Renovate program

Home equity line

Cash out refi

I'd want to do this with as minimal up front out of pocket expense as possible (such as closing costs and appraisal). I humbly ask for some advice.

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Old 03-09-2012, 03:52 PM   #2
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What's the best way to refi in order to conduct home repairs?


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Originally Posted by kadetklapp View Post
I'm in a pickle. I bought my house three years ago this month, and while we love it, several semi-major problems have popped up. Last spring, we had to demolish our downstairs bathroom due to a flood caused by a leaking sump pump line. It had some previous water damage and we weren't willing to live with a smelling, nasty, moldy basement bathroom. We knocked it out in anticipation of rebuilding it shortly after with steel framing or something rather. well, that hasn't happened. For the last year, I've been having issues with the HVAC. First it was the furnace which I fixed when we bought it, then the outside unit fan went bad, fixed that and discovered it might have one more season left, then this winter I've been battling multiple furnace issues to the tune of a few hundred bucks. It's a 1983 Rheem and it might be 60% efficiency. Then there is the sagging garage wall issue, along with a breaking/broken garage door. Estimates on a new door installed are around $1000 not including fixing the sagging wall. I also need to replace a couple of windows and a couple of doors. There is also a sewer gas problem in the upstairs bathroom because it's not vented correctly.

Ugh.

So, after only three years of ownership, making the payments consistently, I wonder if I have a chance in heck of even getting a refi or line loan. I figure I will need a minimum of 12 grand just to make repairs and replace the HVAC and garage door and rough-in a new downstairs bathroom. While my credit isn't the greatest, I don't have late house payments or car payments and I have made a few improvements since I purchased the home (fixed backyard drainage problem and built a new front porch).

I'm with Well's Fargo, and I don't have any beef with them, so I'm wondering if I should just try to go thru them. their options are-

Refi and Renovate program

Home equity line

Cash out refi

I'd want to do this with as minimal up front out of pocket expense as possible (such as closing costs and appraisal). I humbly ask for some advice.
Well your going to pay for it one way or another the costs the banks will get their pound of flesh. First how is your credit score? above 780?
those questions every lender is going to look at plus the appraisal they will look all over your home inside and out. If this was all done by a broken pipe. You should have filed a home owners insurance claim and had the work done that way then get a new insurance company as soon as the work was done. right now you might be over a barrel? because of the damage done and not repaired in a proper time frame. You might want to look into a rehab loan from the Government? and the last thing is do you have enough equity in your home? House price are still on a free fall! I have a home that I paid 100k for fifteen years ago it was appraised in 07 at 300,000 and now it worth 115,000.

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Old 03-09-2012, 04:08 PM   #3
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What's the best way to refi in order to conduct home repairs?


You're going to have to pay for the refi any which way you try and go about it, and the central question is whether you have enough equity in the house to take money out of it. If you've only been there three years and put a minimal amount down at purchase then you most certainly don't have enough equity to do a successful refi that includes taking money out of the house.

You'll be much better off looking at a HELOC (home equity line of credit). It's simpler, less expensive, and is a better way to go when you're looking at your sort of circumstances. It's essentially a secondary mortgage.

At the end of the day though, any option is going to hinge on how much equity you have, including the HELOC. Wells Fargo is not going to give you preferential treatment because you have an existing loan with them. Mortages are bought and sold like commodities.

If I were you I would call up a mortgage broker and discuss your situation. They are in the best situation to tell you what approach best meets your needs and is available to you given your resources.
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Old 03-09-2012, 06:40 PM   #4
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What's the best way to refi in order to conduct home repairs?


Your question cannot be accurately answered here. All we can do is guess.

Here's the bottom line: Lending institutions have become pretty tight with lending money for houses. No bank or mortgage brokerage is going to loan you more than 80% of the appraised value of your house - and that is assuming you have an excellent credit rating (750 or above).

Re-financing, a 2nd mortgage, a home equity loan, and/or a home equity line of credit all operate under the same guideline. The total of all loans against your house cannot exceed 80% of the appraised value of it.

Ironlight is correct. A Home Equity Line Of Credit is probably your best bet, partly because you won't incur several thousand dollars in closing costs.


As has already been mentioned, the best thing for you to do at this point is to go into your bank and talk about this, and/or go to a mortgage brokerage. Don't limit yourself to talking to just one bank. Go to several. Also, don't commit to anything until you've carefully researched all your options.


Good luck!

Last edited by DrHicks; 03-09-2012 at 06:44 PM.
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Old 03-09-2012, 11:31 PM   #5
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What's the best way to refi in order to conduct home repairs?


And just to clarify in case you've never worked with one, mortgage brokers deal with a variety of banks and different kinds of mortgages. They are middle men...specialists in getting real estate financing done for a variety of different customers. You're going to get a quick and dirty and honest answer from them regarding what your options are and what you qualify for.
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Old 03-10-2012, 02:01 AM   #6
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What's the best way to refi in order to conduct home repairs?


Banks are not the only or even the best sources for money out there. Find a mortgage broker. As Ironlight mentions, they may be harsh but will play fair with you.

DocHicks is right in suggesting to watch out for closing costs on refinancing. On the other hand banks love nailing for lines of credit even as much as their credit card products.

Do be careful and not trap yourself. Thanks to President Cheney, it remains tough out there at the moment. Many people are finding themselves buried in housing situations where the debt load is higher than the value of the house, at least for the short term. Sinking $20K into a kitchen used to be a given selling a house. It will not help at the moment.

Last edited by user1007; 03-10-2012 at 02:14 AM.
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Old 03-10-2012, 03:50 PM   #7
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What's the best way to refi in order to conduct home repairs?


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Originally Posted by sdsester View Post
Do be careful and not trap yourself. Thanks to President Cheney, it remains tough out there at the moment. Many people are finding themselves buried in housing situations where the debt load is higher than the value of the house, at least for the short term. Sinking $20K into a kitchen used to be a given selling a house. It will not help at the moment.
Maybe you should think about sobering up, or at least make sure your meds are in check, before posting off-topic political cow excrement on a home improvement sight in the wee hours of the night............

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