The way it works is the lender assesses the home at the current price. They determine what it might be worth after the renovations are complete. They add the values, less the down payment, and fees, to give the final mortgage amount. The usual renovation allotment is about 10% of the total mortgage amount.
Next, the lender needs a written work quote to verify how much repairs and improvements will cost. If approved, the lender grants the purchase improvement mortgage but holds back the amount calculated for renovations, until the work is complete. For larger projects, some lenders will release funds to cover parts of the improvement as they are completed and verified.
During the 20 years, I have been a broker, this option has been available, but not a lot of people are aware of it. I have had recent inquiries by real estate agents on pre-owned home listings. When they mention their clients are hesitant to make an offer because of needed renovations, I suggest they look at the purchase plus improvement mortgage. It allows buyers to widen their search pool for ideal homes. If you are selling an established home, this may be a good selling feature.
Why not take advantage of the current real estate market deals in some of the established areas? Let me help you get an updated home that you and your family will enjoy.
Feel free to contact me, and I will explain the process in more detail and answer any questions you have. Let me lend my mortgage experience to clarify and simplify the process that will ensure you get the home you desire.