House hunting in today’s hot market, while also working within a limited budget hoping to land a great deal on your dream home can be a difficult task to undertake. But if the homes you’ve been looking at have the potential of becoming your dream home with a few renovations, a purchase plus improvements mortgage might be the solution you’ve been waiting for.
What is a purchase plus improvements mortgage & how can you benefit?
A purchase plus improvement mortgage is a mortgage like any other, but with the benefit of being able to add a little extra funding to the overall mortgage, to fund those renovations right after purchasing the home. Of course, if you have the funding set aside in your savings to complete the renovations you are planning, all the better. However, finding the extra money after making a large down payment can be tough. You could take out a loan in addition to your mortgage in order to cover your renovation costs but the interest rate on you loan might be higher than you would like, and you would have two monthly payments to make on an on-going basis. The key benefit of a purchase plus improvements mortgage is that fact that you can secure the funding for renovations at the same time as your mortgage. Which also means only having to worry about paying one loan payment to your mortgage lender each month opposed to two, while saving on interest.
What do I need to qualify for a purchase plus improvements mortgage?
When it comes to qualifying for a purchase plus improvements mortgage, you will need to make sure:
- Your credit is in good standing
- You have a secure income that makes paying your mortgage loan affordable
- You will need to collect estimates from reputable renovation or construction companies to get an idea of how much extra funding you will need to secure in order to complete the renovations you have in mind.
- And you will need to have a down payment that is at least 5% of the purchase price and renovations jointly
For example, if you are planning on buying a home for $350,000.00 and would like to make $40,000 worth of renovations – You would need a minimum 5% down payment of $19,500.00.
A purchase plus improvements mortgage is a great option for first time home buyers willing to take on a renovation project or two in order to create their dream home, but you can also secure a purchase plus improvement mortgage for new home construction as well. Learning your options when it comes to your mortgage, can help you not only enjoy becoming a new home owner, it can help you to achieve the home you’ve always wanted. If you think a purchase plus improvement mortgage is right for you or if you would like to learn more – Feel free to give me a call to discuss mortgage options specific to you as an individual and together we’ll make a plan to make your dream home possible.