Construction: What are my options?

amother

OP ↓

Wed, Sep 18 2024, 6:58 am

Hello ladies!

I'm hoping some of you super-smarties out there will be able to help me understand this process and understand what our options are.

For reference, I don't have a lot of financial smarts, and my husband is not from the US, English is not his first language, so the two of us are the proverbial blind leading the blind when it comes to money.

We own our sweet little house (in Lakewood) for about 7 years. We bought it for about 340k when real estate was a lot cheaper than it is now. Our house is currently worth about 800k. We owe about 200k left on our mortgage.

We are desperate to do some construction. Part of the construction would be turning the basement into offices for my husband's business, converting the garage into more living space, and repairing our very old and inconvenient kitchen.

Can someone wise help me understand what my options are here?

Can we borrow money for construction against the value of our house? Would that mean loosing our very low interest rates? Would it be wiser to get a home improvement loan? A small business loan? Are there private loans (gamachs?) that would allow us not to pay interest?

Any and all help would be so appreciated!

amother

Geranium

Wed, Sep 18 2024, 7:11 am

We took a home equity line of credit. We wanted a loan we could pay back as quickly as we were able , not a mortgage style loan, though you could prob just refi your mortgage and take more of a loan on it now but that comes with closing costs etc and prob another mortgage rate, so that’s why I imagine heloc is prob better. You should speak to a mortgage broker and have them walk you thru options and costs etc. a construction loan we were told is usually more costly and higher interest than a heloc.

UQT

Wed, Sep 18 2024, 7:12 am

If you take out a line of credit on your house it won’t affect your old interest rates.
If you take out a completely new mortgage, by paying off your old mortgage and taking out a larger one you would pay the new rate.
A line of credit against the house would probably be your best bet. You would pay two separate loans each month.
I would be surprised if a gemach would cover such a. Large loan.

amother

↑ OP ↓

Thu, Sep 19 2024, 6:47 am

UQT wrote:

Good morning everyone! This is really helpful, ty!

amother

↑ OP ↓

Thu, Sep 19 2024, 6:48 am

amother Melon wrote:

whatever you decide to do, maybe wait a bit. the interest rates are projected to go down.

I find it so cool when people say things like this ... Like, how do you know? How can you predict such a thing?

amother

Hydrangea

Thu, Sep 19 2024, 6:54 am

amother OP wrote:

I find it so cool when people say things like this ... Like, how do you know? How can you predict such a thing?

Bec the feds lowered the rates yesterday.
It takes some time for the market to catch up but they will definitely go down a bit.

amother

Pumpkin

Thu, Sep 19 2024, 7:29 am

amother Hydrangea wrote:

Bec the feds lowered the rates yesterday.
It takes some time for the market to catch up but they will definitely go down a bit.

Will construction costs spike ?