Can loan funds be used for rehab if the value of the property is higher than the purchase price and the overage will cover any rehab costs?
Yes. The appraiser should do an as improved appraisal. The lender must control the process, similar to what they would do for a construction-perm loan, depending on the scope of the project. It is up to the lender to decide whether or not the customer will be permitted to do the work. The loan can include anything typically considered part of the structure, including built-in appliances. RD will not issue the Loan Note Guarantee until the project is completed, inspected, and the lender certifies the loan conditions have been met. The work should be completed within 6 months. That is because there is a requirement for a new appraisal at the end of 6 months. If the property value declines at the 6 month, the Commitment may not be extended or it will be extended at a lower amount.
Related Questions
- I am about to purchase a property at a price significantly below the assessed value. Will my property taxes be based on the new purchase price or on the assessed value?
- Why must a buyer using a loan with NSP funds be required to pay less than full value for a property?
- What is the difference between a propertys appraisal value and purchase price?
