Thursday, April 30, 2009

Home Renovation Costs Rolled into a Mortgage

My son is buying his first home and asked a good question. How can he build on a room addition when making the purchase?

Well, just like getting the qualified for the loan, you have to talk to your lender about your intentions and the affordablitly of those renovation payments. There are loan packages out there for those types of repairs.

The Federal Housing Administration's (FHA), 203(k) loan is one of the most popular renovation loans generally used to update or improve homes or condominiums that need a minimum of $5000 in essential repairs, like new wiring, plumbing, roof repair an structural damage.

You may choose a 2nd mortgage on present home to do some repairs. It's also called a "Equity Loan". A USDA loan may work to get some repairs done before you actually purchase the home... providing the home appraises for more than the purchase price.

Your lender will need to qualify you for these types of loans. Each of these loan programs have restrictions and may not be suitable to your needs. A good realtor, lender and tax advisor can help you make the right decision with you. Call me if you have questions or need to get qualified with a great lender!

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