Are you contemplating purchasing a condo or house which needs some immediate renovations?
The problem for many buyers is to find the cash to do the reno. There’s a big demand on your cash reserves for the down payment, closing costs often including two land transfer taxes and then moving costs and light fix-ups.
However, there is a way to get the funds to do your required renovations without depleting all your cash or supplementing the funds you have already or without drawing down on your more expensive line of credit or credit cards.
The program is called Purchase Plus Improvements. The program is not meant to fix deficiencies however. The improvements need to increase the property’s value after they’re completed.
If you are envisioning installing a new kitchen, bathroom or flooring, you can add the improvements into the total mortgage loan amount. This program may help you to decide to purchase an outdated home, especially if the overall cost is in your price range.
Here’s how the product works…
- The lender will need a break down of the requested improvements added into the mortgage lender’s application notes, along with a copy of the renovation quotation
- The total down payment will be based as a percentage of the after-the-improvements estimated market value
- You are allowed up to 120 days after closing for the improvements to be completed
- The cost of the improvements can be up to 20% of the initial purchase price up to a maximum of $40,000
- For improvements costing under $15,000, the borrower will need to provide paid receipts or an invoice for proof of completion to get reimbursement
- For improvements costing over $15,000, the borrower will need to pay for an inspection report to show proof of completion of the renovations
- The new home owner will receive a single advance from the lender once the improvements have all been completed.
If this happens to you, call your mortgage professional and talk to your Realtor right away to discuss how you might structure an offer differently.
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- Don’t start your home buying experience on the wrong foot - Meet for a Buyer Consultation first!!
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