Funding a Home Remodel in San Francisco

If you're in the market for a remodel but you don't think you can fund it, stay tuned, I'm going to have some very interesting tips on how you could fund your remodel.

When you're doing a remodel, you have to keep in mind they're all at different stages as far as the price range go, a kitchen remodel is priced totally different from a home edition or ADU garage conversion but none of it matters, it comes down to how do you fund the idea?

Now this blog it’s going to require you to keep an open mind. These might break some financial rules that you were brought up with or that you were told from your parents or teachers but as the author of this blog I’ve seen a lot of scenarios play out successfully with the ways mentioned below. I hope you enjoy!

A few ways to fund your remodel is a partnership, a private loan (most often from a family member) or the best way is to use the equity you already have.

So, you can do this two ways; you can refinance your home, or you can use a home equity loan.

Number one Refinancing is when you take an old loan and you create a whole new one to kind of swallow the old one. So if you had a $500,000 mortgage and now the market has appreciated a bit, now you had a little more equity in your home, maybe your house is worth 1 million. That’s $500k in new equity. You can now go to the bank and get an $800,000 loan that swallows that $500,000 old loan. They will cut you a check for 300k you can now use to fund your home remodel. 800k loan – 500k old loan = 300k free money.

The best part is this is NOT a new loan and is a NON taxable event from the government! This is the best way financially AND if you plan on staying in your home for years to come.

The second way you can fund this your dream home is a home equity line of credit, a HELOC. It's a little bit different from a refinancing. With an equity line of credit, the bank will lend you a line of credit on the existing equity in your home. So if you have 300,000 in equity, the bank will lend you a line of 300,000 credit. Now, what that is basically is a checkbook with $300,000 limit.

It's up to you how you want to use that. Fund the whole remodel or do it in phases, if you want to do a kitchen remodel, you can write a check for the kitchen remodel. If you want to do the bathroom or the full thing, you can go ahead and use it as a checkbook, and then you just pay the monthly note on that as well as the mortgage.

You still have your existing mortgage, and then you also have a line of credit to pay back on top of that. Could be a great way for to fund a remodel whether you are staying in your home or planning to sell it.

The third thing you can do is partnership. You can partner with a house flipper and you can partner with those people. You can say, "Hey, I have a home. Can you fund the remodel? We're going to partner on the new equity."

So when you partner with new equity, let's say you have zero equity, but you know can get 800,000 in equity once the remodel is complete and market forecasts have been predicted. You can go to these people and say, "Hey, let's work out a partnership where you fund the remodel.

I already have the house. When we force the equity into 800,000 from this beautiful remodel, I'll take 90% or 95% and you can take 5-10% of the new equity." Because once you fund the remodel, you will have forced appreciation so whatever split you work out is whatever you work out.

This one really only applies to a home sale but it’s a way to get a little more out of your home if you are going to sell it. All right! So, those are a few ways you can fund a remodel. If you have an idea for your home, if you have some kind of idea or vision, we can implement it and make it happen. Go ahead and call us and we can even navigate on more ways to fund a home remodel.