Are you eyeing up a house that you love but it needs a little something? Imagine finding your dream home and being able to add the features and upgrades you want, all wrapped into your mortgage. With our Purchase Plus Improvements program, you can make it happen. Let’s take a closer look at this opportunity to turn a house into your perfect home.
How It Works: The Purchase Plus Improvements Program
Let’s say you’ve found a house listed for $350,000, and you’ve been pre-approved for a mortgage up to $380,000. Here’s where the magic happens. You can borrow an additional $30,000 on top of the house price to invest in renovating and upgrading your new home. The best part? You’ll secure the same mortgage rate, terms, and conditions as any other mortgage.
Steps to Purchase and Improve Your Home
- Get Pre-Approved: Start by getting pre-approved, so you know your price point and are ready to make your move.
- Find the Perfect Home: Search for your dream home in a great neighborhood within your price range. If it needs some updating and renovations, that’s where the fun begins.
- Negotiate and Get Your Offer Accepted: Work with your realtor to negotiate and get your offer accepted. Meanwhile, get your contractor(s) into the home to assess the necessary improvements and write you a quote.
- Gather Documentation: Send us your purchase contract, MLS feature sheet, and a detailed renovation quote from your contractor outlining the work to be done.
- Bank Approval: Once your paperwork is in order, we’ll work on getting you approved by the bank or lender.
- Funding Your Renovations: On your closing day, the bank or lender will send the funds to your lawyer in combination with your down payment to pay the seller the purchase price of the home. The funds for your renovations are also approved and ready to be disbursed once the work is complete. In other words, you have to complete the work BEFORE you get the renovation money from the lender. You need to have a plan in place to cover the costs until the bank can reimburse you.
- Inspection and Completion: After the renovations are finished, contact our team. We’ll arrange for an inspection by an appraiser to confirm the work is 100% complete. There’s usually a small fee for this inspection, typically around $300.
- Money Release: This is the magical day when the funds are released to you, and your bank account is replenished.
Important Details You Should Know
- Down Payment: Your down payment is calculated based on the entire project cost. In our example, the home was $350,000, and the renovations were $30,000, totaling $380,000. You’ll need a minimum down payment of 5% on the $380,000.
- Timeline: Most banks prefer to see the project completed within 120 days (4 months) but we have options for longer time periods, sometimes up to 1 year.
- Borrowing Limit: Most banks will cap the renovation/improvement budget at 10% to 20% of the home’s value or a maximum of $100,000.
- Limitations: The program can’t be used for items like appliances that aren’t physically part of the house structure.
- Multiple Draws: We work with a few lenders who allow up to three draws, meaning you can receive portions of the renovation funds from the bank as the construction progresses.
With the Purchase Plus Improvements program, your dream home is just a few steps away. You can turn that “fixer-upper” into the cozy, modern space you’ve always wanted without the stress of separate financing. Contact us today to explore your options and embark on your journey to homeownership, your way. We’re here to help you create the home of your dreams, one step at a time.
Hi, I’m Jill, your mortgage pro. I am here to make the world of mortgages less confusing so you can feel confident in your financial decisions. Through my blog, I aim to provide you with the knowledge and guidance you need to make informed decisions. Your financial peace of mind is my top priority.
