Shop Around For Your Mortgage

Shop Around For Your Mortgage
Author: Lou Lynch

When we visit our bank to ask about mortgages, we get advice based on our own particular financial case, and usually we are offered a number of mortgage suggestions. Many of us inevitably feel that the bank has taken a lot of trouble and that we have to pick one of these choices offered to us.

If we are Mr Joe Average, then there will no doubt be adequate mortgage solutions at the bank. But, in fact, the bank has a lot less scope in the choice of mortgages that it can offer you, than other institutions. If you either want something a little different, or your personal details are a little different, you may benefit from shopping around.

A mortgage broker will have many alternative choices at his fingertips. In many cases, you may not realize that some scenarios even exist!

For instance, what if you are a thinking of buying an older home, and need extra renovation cash? Lets say for example the only house you can find that you like needs $20,000 in repairs. There is a mortgage to accommodate this. This type of mortgage is called a “purchase plus improvements” mortgage.

The title is self-explanatory: Once you find the home you want to buy, you decide which repairs or improvements are required. Now you have to act quickly to get written estimates of all the repairs you want included in the mortgage. If you plan on doing the work yourself, you will still need written estimates for the materials. Often a home improvement depot will provide you with these. You have to do all of this very quickly, before your mortgage approval process deadline, so be ready – know where you are going to shop for the materials and the written quotes before the time comes.

The repayment part of the improvement loan works like this: you apply for the mortgage along with the quotes for the improvements. Also, if you are putting 5% down on your house, you will have to cover a 5% down payment on the cost of your repairs as well.

The lender will only reimburse you for the work, after it is completed, so this is the tricky bit. You will need the money up front to pay for the materials in order to do the work. Hopefully, you have a credit card that might work for the short term. If you are hiring someone to work for you, make sure they know that their payment will be at the finish of the work. And, after an inspection has been made by the lender's appraiser.

If you are lucky enough to already have equity in your home (maybe you have had the house for a few years), a mortgage broker can also help you with an equity mortgage.

So as you can see, there are a couple of different options available to finance a renovation depending on whether you have equity, or whether you want to renovate or update a house you are in the process of buying to live in. There are other options as well, so it is advisable to talk to a mortgage specialist before planning a renovation or house purchase.

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Written on behalf of accomplished Ulster County real estate broker, Lou Lynch. Lou uses the latest technology available in the industry to make sure that his clients get exactly what they're looking for. Let Lou be your guide to the Ulster County real estate market.