Home > Buying a home, Mortgages, Uncategorized > Can I add the cost of renovations to my mortgage?

Can I add the cost of renovations to my mortgage?

So you’ve been looking and looking for a home and you finally found one that you think will work for you and your family.  It has the right number of bedrooms and  bathrooms. The kitchen is a decent size. It’s in a good location. It has that fireplace you’ve always talked about and the yard is really nice. So what’s the problem?

The driveway is, well – non-existent really. It is rutted dirt and rocks and since you don’t drive a hummer, you will likely scrape the bottom of your car every time you come in or out. The kitchen, while spacious, has appliances, a floor and counter tops that look like they were picked out when June and Ward Cleaver were buying their first home. (For you younger folks, that’s a reference to a 1950s sitcom). The carpeting in the living room is a 1970s Rya Shag which you think is probably hosting an entire population of very small vermin. To top it off the central air, while functioning, appears to be on borrowed time.

All of these things, you decide, are fixable and do not really detract from the long-term desirability and functionality of the house. It’s just that once you move in, you won’t likely have the money to update and replace any of those things for years.

Good news! In many cases, based on your specific situation, you may able to borrow money right in your primary mortgage above and beyond the purchase price of the home so that you can fix things up.  There is a program from the U.S. Dept of HUD called 203(K) that lenders may allow you to take advantage of. It helps home buyers finance money above their purchase price in order to improve or upgrade their new home.

There are some limitations (of course) but typically it’s pretty liberal. The maximum amount you can borrow above the purchase price is $35,000. Basically it’s about improvements that will become a permanent part of the property – with the major exception of structural changes – for example you can gut and update a bathroom or kitchen but you probably cannot put an addition on the house to add an additional bathroom or expand the kitchen.

Here is a link which will give you  details – but if you think this is something you want to do, you must discuss it with your lender as to how it applies to your individual situation.

Good Luck and PLEASE BE CAREFUL with tools!!!!


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