Looking to Buy but don’t have the Cashola to Renovate? Look no further than PPI.
Do you binge-watch home improvement shows and dream about having that fresh-pad-feel but are concerned that you won’t have the extra cash to put into a new place?
If you’re scraping funds together for a minimum down payment it can sometimes be disheartening to see what’s out there in your price range, especially when you come face to face with that dingy kitchen or oh-so-drab bathroom.
Don’t fear because there is an Ah-Maz-Ing program out there called Purchase Plus Improvements for properties that might need a little TLC.
It’s basically a way to kick off some renos immediately after taking possession of your new home, while having everything rolled into one mortgage payment once the dust settles (literally).
Sure, there’s always the option of putting things on an unsecured line of credit or credit card but these are at much higher interest rates than your mortgage interest rate.
There are some ins and outs to the program so to simplify things I’ve included some basic info below:
Only for Insured purchases (less than 20% down, less than $1MM purchase price)
Borrow up to 10% of the property value to a maximum of $40,000 (in some cases 20% of the purchase price is permitted)
Funds are held back until the work is completed, then released to you once confirmed
You need to provide quotes for the work and the work must increase the value of the property
Qualified improvements do not include furniture, appliances, electronics or other moveable property (i.e. that big screen TV you’ve been eyeing)
One question I often get asked is - how do I pay for the improvements if the lender is holding back the cash? Think of it as a little short-term pain for a long-term gain – you can use a credit card, line of credit, a temporary loan from family or a contractor who will finance the work and take payment upon completion.
But how much is it going to cost? Probably less than you think. An extra $40,000 over 25 years at today’s rates is less than $200/month, or roughly $50/month per $10,000 in improvements.
Getting knee-deep in renovations right off the bat may not be for everyone but leveraging Purchase Plus Improvements can be a great way to get into the property of your dreams without the turn-key price tag.
Questions? Let’s talk.