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for instance say i want to buy a home for 70 k. But I want to put 30 K into repairs and improvements into the house. Would I have to get a mortgage for 70 k and then a separate loan for home repair for 30 k.. or could I just get the mortgage for 100K.?

4 Thoughts on is it possible to get a loan wrapped into your mortgage?
  1. Reply
    February 5, 2014 at 6:30 pm

    No. The bank will only lend you the purchase price of the home.

  2. Reply
    February 5, 2014 at 7:00 pm

    If you are wanting to make $ 30,000 of home improvements, you may want to check out construction loans. Some construction loans are set up with permanent mortgage options. Some you would have to apply separately. A family member bought a house that required a lot of work, to include pretty much gutting the inside, new roof, bathroom, etc. They got a construction loan…..then once they completed the work, they got a mortgage on the property. With the construction loan, you have “access” to the money to pay for the repairs/improvements.

    Construction Loan Information:
    “If you are planning on buying an existing home with the intention of conducting a major remodel then a construction loan is the only effective way of doing that. A construction loan will not only provide enough loan to purchase but also enough to money to make the payments during construction and all the work to be done.

    The reason for that is the fact that a construction loan is based on the future value of the property, rather than the purchase price. Loan to cost limitations will apply which are outlined in the “construction loans” page.”

    A lender will not loan you $ 30,000 extra to do improvements to your mortgage. If, for example, the purchase price was $ 100,000………then you would have to pay the required down payment, some lenders may want as little as 3 percent down, while others may want 10% or as much as 20%. So, if the bank required 3 percent down………you would need $ 3,000 cash. Plus, you would need cash for closing costs, which can average anywhere from $ 1500 to as much as $ 4,000 depending on whether you will pre-paid items like your mortgage insurance and taxes (escrow).

    Prior to the lender approving the mortgage, they will require an appraisal to determine the value of the home on the market. So, for example….if the purchase price was $ 100,000………..and the appraisal comes back at $ 80,000, then the bank is not going to lend you $ 100,000 because the price exceeds the value. In those cases, if the seller does not want to come down or is unable to come down on the asking price…..unless you had $ 20,000 cash to meet the purchase price amount from the appraisal amount, the mortgage would not go through.

  3. Reply
    February 5, 2014 at 7:06 pm

    Yes, of course.

  4. Reply
    February 5, 2014 at 7:40 pm

    You don’t want a construction, you want a rennovation loan, such as an FHA 203K. That’s where you borrow enough to buy the home and make the repairs. Maximum repairs will be capped at $ 35,000.


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