@Anonymous wrote:
I am looking at my options for getting cash for some home improvements in preparation for a sale and I would love some advice.
First, is it wise to refinance if I plan to sell within the next two years? I have some equity to borrow against (in the neighborhood of $50K+) and I know the improvements I am doing will add value.
Which type of loan will be most beneficial for me?
Standard home equity loan
FHA 301K refinance
VA cash-out refinance
Additional information: two years post-bankruptcy, 690 credit score with minimal balance (less than 5%) and steady income. I would also prefer that my payment not increase, which I know is not possible with a standard home equity loan. My current mortgage rate is 3% but I don't know if I can get it any lower with the bankruptcy. I intend to sell in the next two years.
How much equity will you have left after the 50K is taken out?
It will be difficult to find any option over 90% off your homes appraised value.
A standard home equity loan would make a lot of sense given the fact that you plan on selling in 2 years and because the closing costs are substantially cheaper. The problem will be finding a lender that will approve you 2 years post discharge.
If you're a Veteran, you can do a VA cash-out refi up to 90% of your home's appraised value. VA does allow you to go up too 100% but not many lenders will take that risk.
An FHA 203K loan may be the best option depending on how much equity you have.
The 203K loan will use the appraised value of your home AFTER the home improvements.
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