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Homebuyers — have you ever found the perfect home in the perfect location at the perfect price, only to be disappointed when you finally get to see it? We’ve all been there before, and that part of the home search process can definitely feel frustrating.
However, while that initial let-down might deter you at first, it’s essential you fully understand the amazing potential of purchase plus improvement mortgages — before you turn your back.
Whether your potential new home requires a little or a lot of work done to bring it up to standard, there are many different ways you can stretch your mortgage to cover any necessary renovations.
So if you’re interested in buying a home that ticks all the right boxes but is in need of a bit of a facelift, then this article is for you. To learn more about purchase plus improvement mortgages, how they work, and if one is right for you, read our post below for more information.
What Is A Purchase Plus Improvements Mortgage?
A purchase plus improvements mortgage is a largely untapped tool that is available to almost all homeowners, new or old, that want to update or construct a new home from scratch but need financial assistance to do so.
Many homebuyers don’t know that any work required to update or renovate their new home can be tacked on to a regular home mortgage. However, a purchase plus improvements plan can allow new homeowners to start making necessary improvements to their new homes immediately after taking possession.
This fantastic mortgage strategy can save new homeowners lots of stress and heartache about financing a much-needed renovation they wouldn’t otherwise be able to afford.
What Do They Cover?
As state above, a purchase plus improvements mortgage covers the expense of any necessary upgrades, improvements, renovations, or a full custom build of a home. However, they do come with some conditions.
Purchase plus improvements mortgages only kick in once an offer to buy a home has been accepted by the seller. From there, a quote for the required renovations from a qualified contractor is added to the final sale price of the home in order for the mortgage lender to determine the full value of the purchase plus improvements mortgage.
Then, only once the renovations have been fully completed and have been approved by a mortgage appraiser for quality and cost will the mortgage funds be released to the homebuyer. This means it’s up to the homebuyer to finance the renovation project up until completion, upon which they will receive their purchase plus improvements mortgage.
How Can I Get One?
For advice on how to obtain mortgages of all kinds, we always rely on our trusted advisor Trevor Watters of Watters Financial Group for his qualified insight. Trevor has kindly provided us with this useful graphic outlining the steps and stages you need to take to receive a purchase plus improvements mortgage.
How Do I Pay For It?
In most cases, you can receive a purchase plus improvements loan with as little as just a 5% down payment on the total cost of your home and improvements project. However, this only applies to the first $500,000 worth of lending value. After that mark, the minimum down payment required is 10%.
For further information on how to obtain a purchase plus improvements mortgage or anything else real estate-related, our team of experienced real estate professionals are always available. Contact us here to get started.