Buying a home in need of renovation may seem daunting, but it's an excellent opportunity to create the space of your dreams. The purchase-renovation mortgage offers a flexible solution for financing both the purchase of your home and the necessary renovation work. Here's a five-step guide to navigating the process:
Step 1: Get pre-approved
Before you begin your search, it's essential to know how much you can borrow. Contact a mortgage broker to get pre-approved. This will give you a clear idea of the total budget available for the purchase and renovations.
Step 2: Find the perfect home
When looking for a home, think about the potential as much as the current structure. Once you've found the perfect property, estimate renovation costs to make sure they don't exceed your maximum pre-approval amount.
Step 3: Renovation planning
After you've made an accepted offer, compile written estimates for the planned renovation work. These estimates will be essential for the next step in the loan process.
Step 4: Start work
Once you've taken possession of the property, you can begin the renovations. Renovation funds will be held by a notary or lawyer until the work is completed and inspected.
Step 5: Finalize financing
Once the renovations are complete, an appraiser will inspect the work to ensure that it conforms to the specifications provided. Once approved, any remaining funds will be released so you can pay the contractors.
The purchase-renovation mortgage is a fantastic option for those looking to personalize a home while making it their own. With up to $40,000 available on top of the purchase price, and only a 5% down payment required, it's an opportunity not to be missed to transform a home to your desires.
If you're thinking of buying and renovating, don't be afraid to choose a home that needs a little love. With the right planning and financing, you could end up with the home of your dreams.
