I own a home, which is paid in full. Can I borrow against my equity to build a new garage and porches if I have no immediate plans to sell my house?

Asked by Sssteve, Chicago, IL Fri Mar 12, 2010


Rudy R. McDo…, Mortgage Broker Or Lender, Bloomfield Hills, MI
Sat Mar 13, 2010
Hi Ssteve

I agree with some of the other responses. Depending on the size and type of porch and garage you're looking to build, if you only need 35K or less, I suggest you get a personal line of credit loan rather than a mortgage. If you have solid credit, income/job, and savings, you should be able to get a great rate and terms comparable to or even better than a traditional mortgage. It will also require less paper work , time, and expense and not put your home in jeopardy.

Furthermore, although the loan itself will probably not be tax deductible, if you keep the receipts of all the improvements or additions you did, you should be able to write/depreciate a large portion or all of it off. But consult with a local tax consultant for your own state specific requirements.
0 votes
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Flag Wed May 8, 2019
Wayne Beals, Agent, Chicago, IL
Sat Mar 13, 2010
Hey Sssteve,

About half the porches our company, Chicago Porch Authority, builds each year are financed either through HELOCS, refis, or other construction loans types. It's very typical. Before you apply for the loan, get a few estimates to make sure you have enough funds to complete the work you're looking to do.

The limiting variable you may have with a refi or HELOC is the buildings current value. You have to have enough equity (even if you own it outright) in this market to get a loan. Also, Porch Violations, can typically throw a curve ball into the financing process. There should be solutions, but make sure your loan officer knows if you have one.

Wayne Beals
Keller WIlliams
0 votes
Jeff Nobleza, Agent, Chicago, IL
Fri Mar 12, 2010
You can either get a loan for a fixed amount or you can open a line of credit that you can borrow against. The line of credit will offer you a little more flexibility as you don't have to borrow the full amount granted. In addition, you can borrow against the line of credit and use it for anything, even a vacation.. The interest paid on either a home equity loan or line of credit are tax deductible. Even if you use the funds for a vacation or other kind of purchase. Interest paid on a personal loan or other loan are not tax deductible. Also, rates on home equity loans or home ewuity line of credit loans are super low right now where personally guaranteed loans or financing through a place like home depot to do a build out are generally higher.
0 votes
What is a home "ewuity" I tried to Google it.
Flag Thu Jan 26, 2017
Dan Chase, Home Buyer, Texas City, TX
Fri Mar 12, 2010
I would even consider getting a personal loan for that at a bank or credit union near you. That way you would not risk losing the house.
0 votes
Steve Smither, , Palatine, IL
Fri Mar 12, 2010

I completely agree with Matt. Also if you need more money for repairs you can also do an FHA 203K rehab loan.
If you have any questions about how to move forward with these loans please do not hesitate to call/email me.

Steve Smither
Senior Loan Originator
Ardain Mortgage Corp.
847-963-1000 Office
847-942-5151 Cell
Web Reference:  http://www.stevesmither.com
0 votes
I am in the same situation. However I want to borrow to care for my 90 year old mother. I have contacted several lenders and they pretty much say, Since it is not my primary residence they will not loan me anything under any circumstances. My credit is 750+ I am at my wits end.
Flag Sat Aug 5, 2017
Matt Bukovy, Mortgage Broker Or Lender, Chicago, IL
Fri Mar 12, 2010
You sure can. You can either do a cash-out refi on a conforming mortgage, or you can do a Home Equity Line of Credit.

Each have their advantages/disadvantageous, which I would be happy to go over with you.

Let me know,

Matt Bukovy
Wintrust Mortgage
0 votes
Michael Cline, , Chicago, IL
Sat Mar 13, 2010

Since your home is paid in full, the easiest thing to do in your case would be take out a home equity loan (HELOC). Just make sure you pay it down as quickly as possible because the prime rate will go up eventually.

Michael Cline
-1 votes

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