Mortgage Moments: Purchase Plus Improvement Loans

Matt Santagapita, Santa Knows Best Andrew Young, Mortgage Wise Financial and The Community Mortgage Movement

Today we're going to talk about purchase plus improvement loans So Andrew what can you tell us about a purchase plus improvements loan? So first and foremost, the concept of the purchase plus improvements is you find a place that you want to do some upgrades to [Matt]: Which happens quite a bit [Andrew]: so whether it's really really old old or you don't like the kitchen, you don't like the bathroom or you don't like the living room, and you want to make some changes to it but you don't have access to all that capital, [Matt]: Yep [Andrew]: in the long, then we can implement what's called purchase plus improvement A couple of things you need to do is, you need to get some quotes from a contractor on the work that you want to do

It has to be on company letterhead of a contractor It can't just be Uncle Tim, coming in being like, 'I'll do it for $13,000', not going to work That napkin deal in this case, not going to work So, we need to be on company letterhead, [then] the lender will approve the work you want to do Okay

You have to cover the costs of the renovation upfront or work with a contractor that will cover the cost of the renovation When the renovations are complete then we can actually send an inspector and appraiser in there to make sure the work is complete and the funds that you use to do the renovations will be reimbursed to you and added on to the mortgage Are there restrictions as to how much somebody can spend on improvements or a percentage of over the the value of the home? What does that look like? Sure, so with most lenders, of course there's different exceptions with different lenders just like with a lot of different things, the rules are 10% of the value of the home up to a maximum of $40,000 Okay And time frame, so Andrew someone looks at doing a purchase plus loan, how much time do they have the to do the work? The lender is outlined at least 120 days, so that's when they'd like to work to be done so they can send the money to the lawyer to get released to you

Is there any movement on the 120 days? Can they make an exception or is it literally it's written in stone, its 120 days, that's it? It's a guideline of 120 days but it's pretty flexible If you get the work done in a couple weeks you can get the money release in a couple weeks It's Matt Santagapita, Santa Knows Best Andrew Young from The Community Mortgage Movement and Mortgage Wise Financial, know your options on purchase plus improvements