You’re pre-approved for a mortgage, you’ve been shopping with location in mind, but unfortunately the perfect property isn’t jumping out at you. There is no doubt about it, finding the perfect property (within your price range) is a difficult task, especially for first time home buyers. So, before you go and let buyer’s fatigue set in, maybe you should consider adding the cost of renovations into your purchase.
Let me introduce you to the purchase plus improvements program! When purchasing a home, buyers can add the cost of home upgrades into their mortgage. The program is designed to allow for up to 10% of the purchase price (to a maximum of $40,000) to be added to the mortgage for renovations and updates. A great option if you can’t find something move in ready, and aren’t afraid to do a little work!
It is simple enough, but there are some steps that have to be followed carefully:
- You must provide written, firm-price quotes to the lender ahead of time for the work that you would like to have completed. The quotes must have your name and the property address on them. This is part of the approval process, so extra time may be needed to complete your financing if you are taking advantage of this program.
- You can use any company you like to complete the work (it doesn’t have to be the same company who gave you the quotes).
- The lender doesn’t give you the money to do the renovations, you have to come up with that yourself up front.
- Once the work has been completed, (verified by an appraiser) the lender will reimburse.
- Any over-spending is up to you to cover. If you got quotes for $30,000 and spend $35,000, the reimbursement from the lender will still only be for $30,000.
- Generally speaking, the work must be completed within 120 days. You can take longer, but keep in mind that you are paying interest on that money from day 1 (your possession date) so the sooner you get the work done, the sooner you get reimbursed.
Obviously this program isn’t for everyone, buying a home is a stressful endeavor to begin with. The added stress of doing renovations right away might not be a good idea. But then again, if you have the financial capacity to handle the cost of renovations and like the idea of making it yours from the start, then this might be just the option you have been looking for!
If you would like to know more about the purchase plus improvements program, and how this program might work for you, please don’t hesitate to contact me anytime!