If you are buying a home, the Purchase + Improvements mortgage is important to keep in mind. When you buy a home we can get up to 10% of the purchase price added to the mortgage for home renovations. Here are 2 scenarios below which shows why this is such a good product. Scenario #1: Let’s say you bought a home with 5% down payment and now have a mortgage of $300,000, and you want to do renovations worth $30,000. With the purchase + improvements we can get the $30,000 added to the mortgage. We would need quotes from a contractor, hardware store, flooring company etc up front. Once we have the quotes we will get the extra amount approved by the lender. After you get the keys to your home, you do have to pay for the renovations up front. (you can even use a credit card or line of credit to pay for the work, or have the contractor bill you afterwards) When the work is done, let us know, and we will have an appraiser confirm that it is complete (no cost to you for the appraisal). The bank will release the money to you, usually within 24 hours. This is especially important with the limitations on refinancing to 80% of the value of your home. Scenario #2 Let’s say you decided to buy that same home with 5% down and had a mortgage of $300,000 and NOT use the purchase + improvements. And then after the mortgage funds you decide you do want to proceed with the $30,000 in renovations. You would need your house value to increase to $412,500 in order to be able to pull the $30,000 out of your home as a refinance. ($412,500 * 80% loan to value = $330,000) It could take years to build up enough equity in your home to pull out the $30,000. It is really easy to get set up, so if you find that near perfect home that needs a little bit of work, don’t be discouraged. We would be glad to help you out. As always if you have any questions please let me know!
Posted on: Thu, 17 Apr 2014 14:56:37 +0000