Are you looking to buy a fixer-upper? Buying fixer-uppers can be a huge risk, but it can also be worth the effort if you make the right decisions.
There are a few things you should know before you seal the deal on the fixer-upper. Read on for the 5 most important things to consider before you purchase a fixer-upper.
1. Your Mortgage Choice Matters
Buying a fixer-upper is a toss-up, but your mortgage shouldn’t be.
Renovation loans are great for fixer-uppers because you can finance a home and the improvements simultaneously. It allows you to pay off the renovations over a long period of time and a lower interest rate than alternative options. This loan may also cover mortgage costs if you have to live somewhere else when you’re renovating.
There are a few different loans that are offered for renovation loans, the most popular loan is the FHA 203(k) loan that is offered through the Federal Housing Administration. If you’re getting a fixer-upper because it is the best choice financially, you may be interested in the fact that FHA 203(k) loans accept lower income and credit scores.
2. You’ll Have to Know Where to Draw the Line
When renovating you’ll have to make difficult decisions on when to draw the line. Choosing to go for the best quality and version of products every time will have you questioning where all your money went by the end of renovations.
3. Renovation Loans Require Extra Consultations
Renovation loans require a lot of paperwork and consultations. You’ll need to take a lot of extra action each step of the way.
It’ll be worth the extra effort when you have an extra layer of accountability and confidence. Everything is done in a way to make sure the money is going where it should be, and the work is done right.
4. You Can Only Do so Much Yourself
Unless you do this for a job, there is probably a point where you’re going to need professional help. Ask yourself what you can do yourself, then figure out the costs of additional assistance.
You may want help with the foundation, as well as assistance from an electrician and plumber. The core of the house is the most important, and the most expensive. It is important that it’s done right.
5. Buying Fixer Uppers Is a Timesaver to Ownership
One of the greatest obstacles for those buying homes is the financial aspect. You need to be able to afford a down payment, have good credit, have a good job, and reliable income.
Loan options for fixer-uppers, like the FHA 203(k) loan, can be utilized by those who have low income and credit scores.
You’ll also be able to catch deals that people who are more financially sound may pass over for move-in ready homes, allowing you to get houses you may not have been if it wasn’t a fixer-upper!
Ready to Buy a Fixer-Upper?
Think you’re up to the task?
When you’re purchasing a fixer-upper, remember to consider any financial, time, and physical limitations.
Buying fixer-uppers can be exciting, but can also prove to be a money-pit. Design creatively and spend wisely.
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