All You Need To Know About Renovation Costs And Mortgage
After hunting high and low for your ideal home, you may have found one and may discover it needs a lot of big renovations. And big renovations such as bathrooms, plumbing systems, kitchen, fireplace, etc require a lot of money. After paying your downpayment and other costs associated with the mortgage you may not be left with such large amounts of money required for renovations.
When you face such a situation, Purchase Plus Improvements Mortgage is your best bet. Purchase Plus Improvements Mortgage lets you add renovation costs to the mortgage. Usually, there is a limit to the worth of improvements that can be added. This limit is usually $40000 and could be increased in special circumstances. You would need to get a quote from a contractor about the purchase of renovation material, though you may or not use the same contractor at a later stage. This quote is required so that the lender accepts it. You then need to order an appraisal confirming the buying price along with the improved value. During the closing of the mortgage deal, the lender will give the funds to your lawyer for buying the house as well as renovating it. An appraiser would later come to see the renovations are 100% complete and upon receiving this information, the funds will be released by the lawyer.
Which renovations are included?
Only those renovations that increase the value of your home are accepted here. These could include renovations for the following areas: bathroom, painting, flooring, kitchen, roof, doors, windows, basement, etc. as they add a substantial value to your home. You would perhaps also like to know what kinds of renovations are not accepted. These include renovations such as lighting, wall removal, addition of a wine cellar, appliance upgrades, addition of a swimming pool, and other kinds of unusual renovations which do not add substantial value, rather they only add minimal value to the price of your home.
Time limit for completion of renovations
Though the time limit for completion of renovations varies from lender to lender it is usually between 90 days and up to a year. If at any point in time before purchasing of the house you think you would require a longer time to complete renovations for any reason, it is best to know the mortgage brokers ahead so that they can find a more flexible lender for you.
Renovations in the current home
You may, however, already own a home and need finances to carry out renovations. For such people, refinance plus improvements is a similar product that can be used. Most homeowners have equity in their home which helps them refinance the home to get access to funds for renovation. Refinance plus improvements is used when you can get access to only 80% of the value of your home. You can also consider a Home Equity Line of Credit (HELOC) which does not require you to refinance.
If you are looking at buying and renovating a new house, and have any doubts or questions, do not hesitate to contact LendX.