Purchase Plus Improvements

Are you on the hunt for a new home but can’t find exactly what you are looking for? You’re not alone. House hunters experience this scenario every day. With real estate prices increasing you may not be able to buy your dream home the first go-round. Think about buying a fixer-upper. There are many potential properties that you can put your own personal stamp on. Why not renovate something? There is a mortgage product called Purchase Plus Improvements .

With the PPI the lender is able to provide additional financing to improve the subject property. This type of mortgage is available to assist buyers with making simple upgrades, not conduct a major renovation where structural modifications are made. Simple renovations include paint, flooring, windows, hot-water tank, new furnace, kitchen updates, bathroom updates, new roof, basement finishing, and more. There are parameters to the PPI mortgage program:

  • Apply for up to a maximum of 10% of the as-improved market value
  • Utilize as little as 5% towards the down payment
  • At the time the application is submitted for approval the lender requires a construction quote to verify the work that is planned for the subject property
  • Renovation to be completed within 120 days
  • A third party (appraiser) must verify completion
  • One advance of the funds once the project is complete

Once the renovation is complete the lawyer would release the funds PPI Scenario Listed or Purchase Price: $450,000 Value of the Renovation: $45,000 As-Improved Value: $495,000 (new Purchase Price) Maximum Borrow: $49,500 (10%) Purchase Price: $495,000 Down Payment: $24,750 (5%) Mortgage Amount: $470,250 Mortgage Insurance: $16,929 Total Loan: $487,179 Monthly Mortgage Payment: $2,146.17 For many, it is a daunting task to seek a mortgage plus a second type of financing to complete renovations, so why not opt for the PPI option? With all the different types of mortgages out there, be sure to contact us so we can show you how we have a mortgage that best suits your specific needs!