For most first-time home buyers, a fixer-upper is their go-to because it is cheap to buy. But what most people forget about when buying a fixer-upper is just how expensive it can get. With all the renovations, unexpected events, then inspections and all
the finishing touches, it could end up being more pricey than expected.
Here are some things to consider before purchasing a fixer-upper:
- Mortgage Options
- Renovation loans are mortgages that let you finance a house and improvements at the same time, this is a great way to get all the renovations paid for, or at least a little cushion for them!
- Some loans that you can look at -- FHA 203(k), VA renovation loan , HomeStyle , and CHOICERenovation loan
- Work Needed and Budget
- Before buying a fixer-upper home, hire a professional contractor to estimate the cost of all the work that’s needed before you make an offer.
- The house you get depends on your skills, schedule and the way you plan to finance the improvements.
- If you get a traditional mortgage, you’ll have to pay for upgrades with cash, a credit card or a personal loan.
- A renovation loan like those listed above can expand your budget and allow you to tackle larger projects simultaneously.
- Don’t be surprised if there are roadblocks along the way.
- If you're looking at foreclosures, which often need work, brace for delays during the mortgage offer process as well.
- With bank-owned properties, you’ll be negotiating with the lender that owns the property, and it may reject your offer more than once.
- Supervision and Appraisal
- Renovation loans often require extra consultations, inspections and home appraisals designed to protect the lender’s investment
- These additional hurdles can be frustrating, but they help to ensure the work is on time, on budget and adds value to the home.
- Creating a Unique Home Perfect for You
- More work than buying a move-in ready home. but it is definitely worth it because it is your design!
Buying a fixer-upper is way more work than purchasing any other property, but deciding whether it'll be worth it or not is all up to the buyers. Is having a dream-home designed and created by you worth the possibility of spending an arm and a leg
in fixing it?