Can I get a mortgage and use part for improvements?

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My husband and I were allowed up front 125k. We found a house we love to 69k. The interior of the house has all updated recently, but it should work. We are eager to see if its possible to make our mortgage for 90k all the improvements. (Cladding, windows, doors, and new mechanics) Our loan is a “rural development” loans, loans which is a 100% financing.

  1. Reply
    L. E. Gant
    February 13, 2011 at 11:33 pm

    It depends on the lender. So, talk with them.

    However, in today’s economic climate, they do tend to dislike loans that don’t have the collateral to back them up. The amount you have been pre-approved for is NOT how much you can borrow, but the maximum you can borrow with the current market value of the property. So, if you’re buying a place at $ 69K, even at 100%, that’s all they would lend you. If you bought a place worth $ 150K, they’s still cap the loan at $ 125K

    But, as I said, talk with them – if your changes will raise the market value to, say, $ 100K, they’d probably look at it favourably.

  2. Reply
    February 13, 2011 at 11:37 pm

    it depends on what you were approved for. I am assuming that you have been approved for a line of credit, since the value you have been approved for is greater than the value of the house. You can definitely use your line of credit to do improvements. In fact, this is recommended since doing this will increase the value of the home. Go for it

  3. Reply
    (0 0)
    February 14, 2011 at 12:27 am

    If the home will appraise for 90 K with repairs done before close of escrow I think the bank will go for it.Better ask the bank before the Realtor makes the offer.

  4. Reply
    February 14, 2011 at 1:17 am

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