How To Work The Cost Of Renovations Into Your Mortgage
Let’s Talk Purchase Plus Improvement Mortgages
With the tightening of the mortgage lending industry, we have noticed that buyers are qualifying for less. This might push a buyer to settle for a home that doesn’t match all of their wants. Or, you might fall in love with the area or bones of a home but want to upgrade certain things.
This is where a purchase plus improvement mortgage might be a good option to consider.
Here Are 5 Things to Keep in Mind When Considering This Option:
1) You will need to cover the initial cost of the renovations and the funds will be reimbursed once the work has been inspected and completed. (Most people consider a line of credit to finance the renovation until funds are released)
2) You must complete the renovation within a certain time frame. Usually 3 to 4 months. Extensions are granted sometimes.
3) Some lenders require you to keep and submit receipts for all work completed.
4) An appraisal is generally completed during the conditional period, prior to renovations starting and an inspection upon completion to verify renovations have been done. These inspections may be an additional cost to you.
5) Your down payment is based off the purchase price AND the improvement cost combined. (eg. Purchase price of $350,000.00 + $40,000.00 renovation = total down payment calculated on $390,000.00)
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