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My plan...

Ive got a plan in place & would like to know if its a good idea or doesn't make sense. Alright so I've been pre approved by my bank & I'm looking to buy a home that's at least 20000 less than the loan amount. Id still used the whole loan amount but would have enough to pay a years mortgage & a little towards helping me fix the home up to my likings. Is this a good idea & does anyone have any suggestions??
  • June 22 2010 - Reno
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Answers (1)

The flaw I see in your plan is that if you are intending to use part of the money for renovation then you would have to get the lender to provide you that type of loan.  It may be all inclusive or a separate loan.  Even if you are only loaning 80 per cent that is considered a conventional type loan and the kind lenders love because you appear well established.  However, based on your comments you are not. The lender will reevaluate the amount of your loan based on the purchase price of the house.  The pre-approval is just to indicate the maximum amount of money you can borrow to help you look for a home in that price range.  If you are pre-approved for $200,000 but find a home for $180,000, if they financed 100 per cent you would get $180,000. Talk to your lender about a purchase/renovation loan.
  • June 22 2010
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