What should I do? (Basement Finishing)

[GoodCredBen]

Hello all! It has been a long time since i last posted on this forum, but i am glad to be back!

I am looking for some guidance...

I purchased my home about a month ago, and financed 95% of it 5% down, (100% total) of the purchase price os $297K. The median home value here is about $375K ....

The reason my house is cheap in comparison (I believe) is because my basement is not finished!

well i am ready to get that basement finished! 

I have gotten quotes and i can have it finished for about 30K...

I want to finance 20K of this...

My current DTI ratio is about 26% with this house payment.... so that is not an issue.... my question comes in, how the hell do i finance the 20k?

I dont want to get a personal loan and have huge payments.... we plan on being here for 15-20 years, so i am okay with financing for 10 or 15 years not to mention the added benefit of having the credit line open for that long...

I want to get a HELOC or just a home equity loan ..... 

If my current appraised value is 300K, and i want to pull a 20K loan (6.7% of home value) can that be done on post appraisal value? I will be adding about 1300sqft and at the current $189.53/sqft... there is a potential to raise the value of my home a conservative 100k about... 

Total finished sqft will be about 2900sqft. 5 bed, 3 bath.... 

Thanks for any input and i look forward to any questions! Thanks team!

[Anonymous]

Several ways go 1) straight home improvement loan   2) Heloc 3) DYI or hire at your own pace for cash      Not the house we in now but the one before dw and I bought a shell of a house foreclosure cheap under $20,000.  We worked most weekends for 6 months and did everything but lay carpet . Material cost was $20,000 plus or minus.

Sold the house for $150,000.  I used all the cash I had at the time and bought material by the pickup truck load. Present  house is a lot larger and cost more. ie 5,000 square feet and $500,000 plus or minus.  Two weeks after closing replaced kitchen - we designed but subcontracted cabinet   installer and granite work out  redid two bathrooms at same time  - I did the sheetrock but hired wallpaper and electric  I also redid one bedroom and studded the basement.  That used up all my cash.  Now once a year take and do over 1 room and pay cash.  I can do most work but not  electric and cannot do trim work.  I like the way I have  done the current house because its all paid for.  DW gets mad and sometimes wants done faster than I can do  and afford but.   Basements in our  area do not add that much for finished out per square foot.   

[medicgrrl]

Where do you live that you're getting $189/sq ft for a basement?  Like the other poster stated, you can get a home improvement loan based on what the appraised value should be after.  Talk to your bank about the requirement.

[Anonymous]

I wouldn't think that basement square footage would be valued at the same rate as non-basement square footage.

[GoodCredBen]

The home is a Split level, so it is not really a basement ...  but the 189$ is for the current finished square feet... below ground, even at half that, would still add substantial equity potentially.... 

I am liking the cash roll option, as i currently have no debt outside of the house, and dont know that i want to do that......

[Anonymous]

One more thing Since you intend to follow the pay as you go suggestion you may need multiple permits. I had to pull 3 permits for electric because work was done at different times. I got a permit for baths, kitchen and stud the basement also.  Some places want permits to do anything. My daughter had to get a permit just to put up a new fence at their house.