Can’t find your dream home, buy a house and make it your dream home! Most people don’t realize that you can get additional funds with your mortgage to do improvements.
Purchase plus improvements is a great way to take advantage of low rates and make your house into your dream home. Once you put an offer on a house, you will need to get quotes based on the improvements you would like to complete. It’s important to only pick improvements you know you will actually have completed. We then send the quotes to the lender and they will include the extra funds into your mortgage proceeds. When the home purchase completes the mortgage funds will be advanced however the lawyer will hold back the improvement money. The reason for this is the lender wants to be sure that you complete the renovations and not just take a trip to Hawaii
instead. So you will need to hire a contractor who is okay with not being paid until everything is complete or have some funds to pay for everything (get some points on your credit cards), once the improvements are complete the lawyer will then release the funds to you.
Here are a few points to keep in mind when doing purchase plus improvements:
- If going through Genworth as your mortgage insurer the max improvements they will allow is 20% of the purchase price. With CMHC it’s 10% of the purchase price.
- Appliances do not count as improvements to the property.
- Every lender has their own guidelines when it comes to doing purchase plus improvements. Some require an appraisal before and after the improvements are made, some require receipts once complete and others require an appraiser to verify the work is complete.
- Some lenders set a time frame for how soon you have to complete the improvements.
- You will receive the best available rate offered by the lender. Your rate does not get increased because you are borrowing extra funds.
If you would like more information on purchase plus improvements please feel free to call either of us anytime!