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Can I get a mortage for more then the house is worth to do capital improvements to the property ?

Say the house is purchased for 425k and I want to put in 75k can I get a mortage for 500k with 10% down ?
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November 06 2013 - US
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Where are you buying and how much do you think the home will be worth after you put $75k into it?  If you think the value will be roughly 20% more than the amount you need to borrow I may be able to help you with a Portfolio Conventional Renovation Loan.  Feel free to contact me via my profile if you would like to discuss.
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November 18 2013
The strategy I have successfully used for many other clients who immediately remodel after purchasing is to bring in a local bank up-front to either arrange a bridge loan, or originate a subordinate 2nd mortgage promptly after purchasing for the $75k improvements.    This is very common in higher end homes.

The 203k loan is a great program  - but FHA has loan limits which might make it unavailable for you - and some serious Upfront and Monthly MIP - so if you can structure as a 1st and 2nd (or 90% 1st) I think you would save a LOT of money.      Here's a link to determine the MAX FHA loans in each market:  https://entp.hud.gov/idapp/html/hicostlook.cfm
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November 06 2013
Yes this is possible, but only with certain loan types. This type of mortgage is outside of the normal FHA and conventional purchase loans so these types of mortgages cannot be used for this situation. The type of loan you are looking for are renovation loans which do exactly what you are describing. One famous type of this loan is the FHA 203 mortgage. This loan covers the cost of the home plus the costs of renovations. From what I've heard this loan can be hassle and requires a lot of effort so be prepared for that. It's never too early to speak with a lender directly. So it would be helpful for you to speak with a lender directly with your situation. There are lenders like myself that would be glad to speak with you to help you get the loan that you need. Well I hope this helps! If you have any further questions or if you would like a loan, feel free to contact me!

Good Luck!
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November 06 2013
Yes you can, but there are specific loan types for this. One is called a 203K HUD Rehab Loan. If you need more information on these types of loans contact a mortgage loan officer or Google it.You can borrow $425k and have a contractor to come out and write up an estimate on the repairs or additions. you will submit that to the mortgage company and it is added to the loan amount. You are required to put down 3.5%, but I am sure they would love a 10% down :).

Oh by the way , make sure you have a real estate agent that understand these type of loans. It is a process and you need some one who can help get you through it.

Good Luck and I hope that help!
Gregory Covington
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November 06 2013
Good day,

In all likelihood, the best financing solution for you would be the FHA 203K loan program.  This program has been in existence for a very long time; however, it is also probably the most under utilized mortgage product in the marketplace.

The 203K guidelines allow for financing under the following general guidelines:

Minimum 3.5% down payment
Credit scores vary from lender to lender, 640 and 660 are most prevalent
Streamline 203K:  Up to 35K in improvements with no structural improvements allowed
Full 203K:  General Contractor required, almost unlimited remodel/renovation scope allowed (including additions, moving house to new foundation, for example).
No luxury items (no new swimming pools, saunas, etc.)
Minimum 5K available (appliances are acceptable)
Value determined by "as is" value at purchase/refinance and "future value" after renovation is complete
Allowable for purchase and/or refinance
Subject to FHA loan limits in your area (high balance FHA is acceptable)
Final loan can be up to 110% of "future value"
Up to six months allowed for remodel/renovation
Up to six months mortgage payments may be included in the loan
All in one loan, no need to refinance out of a construction loan

These are just the basics, of course.  I encourage you to contact a mortgage professional who is familiar and experienced with the FHA 203K loan.  It may well be the solution to your goals.

All my best,

Deborah
NMLS #279125
WJ Bradley

"We Listen.  We Care. We Deliver."
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November 06 2013
 
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