BUYING RESALE HOMES NOW A LOT EASIER!
Our homes in time (usually within 10 years) become outdated. Today renovating your
current home is more difficult because refinancing to do so is now limited to a maximum
of 80% of value. Hence the only other option is to buy. Studies show that majority of
purchasers of resale homes are not satisfied with the home they buy and would like to,
for example, upgrade the kitchen, bathrooms etc. As a result many buy a new home
instead but often are stuck with an inferior location, no trees, landscaping etc.
Now you can purchase a resale home AND RENOVATE it at the same time to your
tastes. This is called PURCHASE PLUS IMPROVEMENTS and is a really excellent
program that gives you up to $40,000 on top of the purchase price for renovations and
upgrades that add real value to the home.
Let’s say you buy for $400,000 and you want to upgrade the kitchen and master bath.
You determine through written plans and contractor quotes that the cost will be $40,000.
If the home is appraised taking the upgrades into account and confirms a value of
$440,000 you can qualify for up to a 95% mortgage. Note, the size of down payment
can be whatever you wish.
You must however submit your plans and quotes for approval at the same time the
mortgage is applied for. Therefore it is best to put in your offer a condition that allows
you sufficient time to obtain quotations AND gives you a financing clause that is longer
than usual (we suggest two weeks versus 5 days) giving you enough time to put your
plans in place and also enough time to get the financing. Your Realtor will negotiate the
timing via the Seller’s agent.
Once you close the purchase and sale you still only need a minimum 5% down payment
and the work must be completed in 90 to 120 days from closing. The extra $40,000 is
held in trust by your lawyer until the work is compete as verified by an appraiser. This
wrinkle means two things. One your contractor will not be paid until upgrades are
finished. Two, you will likely still need to pay the contractor(s) an up front deposit.
Contractors should have no problem with this arrangement when they are shown the
offer and mortgage approval at the higher amount which will cover the appraisal.
This is a really excellent program to help you find a home you will really love.
Please call us first to sit down and discuss this program with us, so that you fully
understand how it works.