We bought an old farmhouse on 5 acres around 8 years ago. We bought it for 235k and currently owe around 180k. The home prices are going up and up in my area and our home has an estimate value of around 300k or more now.
The problem is we bought the house from a douchebag who flipped it and did shitty work in some areas. Some major repairs are needed and my husband does not have the time for these extensive repairs and we don’t have the money to pay someone to do it. I am not handy at all.
-upstairs tub leaked. Tub needs to be replaced, floor replaced, baseboards and lower wall repair is needed, vanity needs to be replaced. Estimate cost at least 10k
-the tub leaked over our kitchen ceiling so now there is a big hole there. The kitchen ceiling needs to be redone and water damage in wall repaired
-there is some water damage to kitchen oak wooden floors
-we ripped out the upstairs carpet. Underneath are 100 year ago old Douglas fir wooden floors. They have paint splatter, gouges, and need new quarter rounds and baseboards moved. Also need to have the stairs redone and stair railings replaced. Estimate cost at a minimum 5k
-the tile in our laundry/sun room cracked and crumbled under our washer and dryer. The washer and dryer are now sitting on plywood to keep them up. The tile cracked in other areas as well. The whole floor needs to be redone
-there are no heating vents in the laundry/sun room. It would be nice to add heating vents because it gets so cold in there
-the electrical box needs updating. Our breaker trips if we use more than 2 burners on the stove and turn on the oven. Might need some other electrical work done 😬
– the paint on the outside of the house around the windows is all peeling off
– the garage door (not electrical) broke and can’t be lifted. The garage also has a sloping cracked concrete floor. The garage is not attached to the house
– the entire upstairs and some downstairs has plaster walls that crack and chip and pieces of the walls have fallen down and we have holes. All this needs to be repaired and repainted
-front door needs to be replaced
-the basement is dirt and limestone. It is musty and gross. When our heat turns on we get the nasty musty smell come through our vents and it gets really bad when it rains despite having dehumidifiers. To mitigate the basement will cost around 20k
– there is a concrete foundation outside of the back side of our living room. So they either tore down a room that existed or made the foundation to add a room. The concrete 8×10 (estimate size) foundation sticks up around 2-3 feet from the ground and just looks like a sore thumb. It would be great to use it to add a room to our main floor.
– there are no gutters on the house. We need to add them
I don’t know when we’ll be moving out. I would like to sell and move within the next 2 years if possible but that will depend on many things including my job and my husband’s job when he graduates from school. Is getting a HELOC a good idea to repair what’s needed in our home?
Our house needs major repairs. Is a HELOC a good idea?
byu/Wild-Blueberry-5259 inpersonalfinance
Posted by Wild-Blueberry-5259
9 Comments
Just make sure you have a clear payoff plan
I would sit down and divide all of these things into two categories, wants and needs. Needs are thing that impact the safety of your family, and things that if they aren’t addressed quickly will lead to further damage and costly repairs (ie a roof leak left unattended will cascade into a lot of other issues). Wants are generally cosmetic (painting walls) or things that don’t materially impact your life (like the washing room floor issue).
The needs are the things that are worth taking a heloc out to address. The wants are things that you should cash flow out of your budget, which means they will be put off for awhile.
So when you do that analysis, what are the dollar figures in each category?
I think first you need to create a list of needs and wants because the list above could easily cost $150k plus. And if you plan on selling the house in 2 years I would probably skip a lot of the “wants”.
You gave absolutely no financial information which is needed to help in providing advice? How much would the HELOC total? How much do the two of you make, what are your expenses and can you handle payments on additional debt?
The best thing you can do is list everything in order of priority. You said you need a new front door. Do you really? If the current door closes, locks and is secure, a new door is low on the list of priorities. The same with things you can do yourselves, like painting the window trim. You said you aren’t handy, well, you can learn basic skills like painting.
If you’re moving, fix what is necessary and take out as little money as possible b/c you most likely aren’t going to get that back. I’m not sure why you would be considering all that work if you’re moving anyway.
Yes, some of these are wants, and some are needs. Separate those out. “Cash flow” the wants, and yes, I suppose it could make sense to do a HELOC for the “needs.”
You MIGHT consider seeing if insurance will cover some of this.
…Why some of this stuff went 8 years without being addressed is another matter. A couple of the things on this list can turn into MUCH bigger problems if left unattended, so I’m curious as to why they were allowed to go on for so long. The lack of gutters leaps out to me. Were there really no gutters for at least 8 years? If not, it’s not really surprising that you’re having the basement issues that you’re having.
Given the right terms, HELOC is one of the best ways to barrow money. Also remember to shop around the rates.
Now… accruing any debt is dangerous if you’re not prepared and responsible. Keep in mind a HELOC is a second mortgage.
I’m going to blunt with you, you have way too many issues to deal with with just access to your equity. You can probably qualify for $30-$60k on a HELOC based what you have said, assuming your debt service to income is still reasonable afterwards. You haven’t given enough information to tell whether you can really afford such a loan or whether it may be better to do a cash out refinance, so it may or may not be a good idea. That said, some of these issues do have to be addressed as they can affect the safety and structure of the home. So ignoring the issue of whether you all can afford it for now, I would fix the problems from the water leak and the moisture issue. Ask contractors for opinions on what could be done and quotes for how much it would cost, make a decision, and get things going. Home improvement projects will usually take longer than you anticipate so outs best to get the ball rolling. As to how to finance it, a HELOC should be viable but we would need more information to know if it’d be the best choice. On the other hand, I would say to put off the cosmetic and other nice to have for now. Figure out a way to hide the paint stains, for example, and the cracked tile. Maybe put rugs down in strategic places? You could also put carpet back on top of the hardwood floor for now, with the plan to save up to have it fixed up and treated several years down the road when this carpet gets old. Unfortunately, though, you won’t be able to finance everything you want right now with a HELOC.
I wouldn’t do a heloc they are always worse than just doing the bulk one time amount and you can always just pay back what you don’t use