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Purchase Plus Improvements Mortgage

A Purchase Plus Improvements Mortgage Allows You to Finance Home Upgrades

If you intend to buy a home that needs some immediate upgrades, a “purchase plus improvements” mortgage may be right for you. This type of mortgage covers the purchase price of the home, plus any renovations that would increase the value of the property. Finishing the basement, adding a deck, redoing the kitchen or bathrooms are all examples of improvements that can be financed with no need for a second mortgage. For current homeowners, a “refinance with improvements” option may be available. 

A qualified Mortgage Consultant can guide you through the process:

Step 1:
Mortgage pre-approvalArranging a pre-approved mortgage not only protects you if interest rates increase, it also gives you a clear price range for your new home. At least a 5% down payment is required for a purchase plus improvements mortgage.

Step 2:
Obtain cost estimates for upgradesOnce you have found a home, you need to get written quotes from licensed contractors on the renovations you plan.

Step 3:
Mortgage application.  For example, with a 5% down payment, your Mortgage Consultant would apply to a lender for the lower of:
95% of the purchase price plus 95% of the cost to finish the renovations, or 95% of the “as improved” market value, determined by the institution which insures the mortgage after the renovations.

Step 4:
Finalize purchase. Your Realtor and Mortgage Consultant will walk you through this part of the process. The funds for renovations will be sent to your lawyer “in trust” when the mortgage closes.

Step 5:
Complete upgradesThe lender will "hold back" funds for the renovations until the work has been completed and inspected, at which time the contractor can be paid.

Interested in learning more about this innovative mortgage option?

An Invis Mortgage Consultant can tell you more about this and many other mortgage strategies.

Posted on Wednesday, February 14, 2007 at 06:43PM by Registered CommenterElaine in | Comments1 Comment

Reader Comments (1)

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July 28, 2007 | Unregistered Commentershaina

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