Home Buying in Georgia>Question Details

Home Buyer in…, Both Buyer and Seller in 30188

What updates or home improvements CAN be included in the sales price/mortgage?

Asked by Home Buyer in Georgia, 30188 Sun Feb 8, 2009

When buying a home, is there a way to get things like home improvements (a fence, finishing off basements,etc) included in the purchase price of a home so you don't have to shell out cash for it all after you close on the house?

Example:
Home priced at $210k...is there a way to get a $2k fence and $10k to finish off the basement by getting a loan for $222k and having the work done immediately??

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Answers

5
Typically on a standard mortgage lenders won't allow mor than 3% of the sales price for allowances etc.

Unless you look at doing a rehab loan.
0 votes Thank Flag Link Mon Feb 9, 2009
The answer is that there really is no answer and it depends. The ability for buyers to wrap that kind of work into the primary loan has largely disappeared as that was one of the reasons we find ourselves in this mess. Money was supposed to be spent on a basement but was spent on a BMW instead....

You'll need to speak with lenders, there are ways but each case is different. Understand as well, an appraisal is going to have to reflect this work and you will almost certainly be required to have a final inspection to ensure it's done. The tricky part is when the work is done, before or after you close? How is it paid for if it's before you close - what if you don't close?

You need to speak with a good mortgage rep and let them war game this for you and they better have a concrete grasp on how the appraisal will go. I'm an appraiser as well and I can tell you with certainty that I have seen poorly written contracts and bungled loan arrangements blow up. The parties think one thing and underwriters see what we present in the appraisal and the deal comes apart. The other option is to try a home equity right after closing, but that has challenges as well.

I live and work right in your area and do this all day every day, feel free to drop me a line with questions - just be careful.

Hank
0 votes Thank Flag Link Mon Feb 9, 2009
If you are looking at resales and qualify for an FHA loan there is a 203K Streamline loan which does allow for certain home improvements to be financed. The money is held in escrow at closing until the work is completed. I would inquiry with your lender or I would be more than happy to recommend a lender.

The other option would be to negotiate these items to be done by the seller prior to closing.

Because cash from the seller for repairs and/ or improvements are considered seller concessions they have to be approved by the lender. Consult with your lender to determine all your options.
Web Reference: http://www.HomesByLorie.com
0 votes Thank Flag Link Sun Feb 8, 2009
In most instances no, unless you are working direct with builder require down payments on fear you may not close. OR option search for another home in same list price does not require much remodeling. GREAT QUESTION
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sun Feb 8, 2009
Hi.
Should you be referring to new construction and it is still builder owned, then some will do certain things, this where your agent would negotiate these things for you. You can also do a rehab loan if it is an older home, but you would need to talk to a loan specialist to see if you qualify for this option as well as to see what all actual options are available upon doing a rehab loan. You should be represented (costs you nothing) by a REALTOR, and if you need a recommendation for a lender, please do not hesitate to contact me.

Tori Lawson
REALTOR
Prudential Georgia Realty
404-918-4671
Web Reference: http://www.torilawson.com
0 votes Thank Flag Link Sun Feb 8, 2009
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