Purchase Plus Improvements Mortgage

[Jacob Perez]

Being a mortgage agent I get a lot of questions about these types of Mortgages on here thought I'd share in a thread for reference. 

I think Purchase Plus Improvements are great I've personally used them for my last 5 deals, but if you're going very expensive on the reno sometimes a re-finance is better suited. 

Anyways here's a quick rundown of how it works:

• Purchase a home for $200,000
• Before closing, get a contractor to provide you a quote for the renovation work you want to perform.
• If for example the quote is for $20,000 of work. You can get a mortgage for $220,000 instead of $200,000.

Details:

• You have to pay for the renovation up front (I use lines of credit)
• Once the work is complete the bank will appraise the house to ensure you did the work you projected
• Once approved they will release the $20,000 back to you and you pay yourself back
• You need to qualify for the mortgage at $220,000 in this scenario not $200,000 and your down payment needs to be for the $220,000 not $200,000 also.

Hope that's a clear run-down & provides value for all those who've been inquiring.