How to Borrow Extra to Fix Up a Foreclosed Home

Buying a foreclosed home can be the best way to get a great price on a home, but it usually comes with a catch — foreclosed homes are often in disrepair. Generally speaking, a foreclosed home is usually in disrepair because, like the mortgage payments, the former homeowner could not afford to keep up with the repairs on the house. Banks often sell foreclosed properties “as is” to minimize their losses. Once the sale is complete, new owners may find themselves wondering how to borrow extra money to fix up a new property after they already signed a mortgage.

  1. Determine the repairs needed on your home. Perform a walk through of the property and list all of the repairs that need to be done. Distinguish between repairs that are necessary to ensure the structural integrity and other safety issues related to the home and those that are cosmetic.

  2. Contact a contractor to determine the estimated cost of the repairs and determine which repairs must be completed immediately and which can wait.

  3. Contact your lender to inquire about borrowing money. Ask your lender what type of loan may be right for the project. If the amount Is low enough, a personal loan might be the best option. If not, you may consider taking out a home equity line of credit, in which the bank uses the value of the home as collateral to secure the loan.

  4. Apply for the loan or line of credit at the bank. When filling out loan applications, remember to bring pay stubs and other proof of income as well as any documents on the value of your home. Once the application is completely filled out, discuss the application with someone at the bank to understand the loan approval process.

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