Purchase plus improvements with Realtor Gino Pezzani and Mortgage broker Mark Fidgett.

Purchase plus improvements with Vancouver Realtor Gino Pezzani and Vancouver mortgage broker Mark Fidgett. That’s right, add $70,000 in renovations to your home purchase for ONLY $3,500. I know what you’re thinking, HOW??? Instead of buying your dream home, Create Your Dream Home! The kitchen’s outdated and the orange shag just doesn’t cut it. Ok, that’s probably a bit of a stretch, but I hope you get the picture. Now you can have your dream kitchen and en-suite with one simple mortgage payment. All of this can be done by putting down as little as 5% of the “as improved” value.

Purchase Plus Improvements literally allows you to add the improvements to the mortgage. The way it works is like this… Let’s assume that you have 5% down payment. Before the mortgage financing is arranged, written quotes are obtained from licensed contractors for the repairs and or the improvements to be done to the home. When the application for mortgage financing is made, the request is made for 95% of the purchase price PLUS 95% of the cost to COMPLETE the improvements. Note: The lender will “hold-back” on closing the “improvement” portion of the mortgage until the work has been completed, normally within 30 to 60 days of closing. Once the work has been completed, the lender will advance the balance of the funds and the contractor can be paid. What does this mean?

Let me give you an example. . . The purchase price is: $5000,000 X 95% = $475,000
The quote for the improvements is: $50,000 X 95% = $ 47,500
Total Mortgage is: $550,000 X 95% = $522,500

Therefore, an application is made for a mortgage in the amount of $522,500 which is 95% of the purchase price PLUS 95% of the improvements. On closing this is what happens… The Mortgage advanced to complete the purchase is $475,000 plus the original 5% from the purchaser’s down payment ($25,000) sufficient funds to complete the purchase of $500,000. After closing the contractor completes the improvements (normally within 30 to 60 days after the closing) the lender advances the hold-back of $47,500, the purchaser pays the additional 5% of the cost of the improvements ($2,500) and the $47,500,000 owed to the contractor can be paid as per the original quote for the work. And you will get $50,000 of improvements done to your home with a cash outlay of only $2,500 (the balance was financed with your mortgage)!

The key for this program to work is that the cost of the renovations has to be reflected in the new “as improved” value of your home.

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