Buying a fixer-upper can be an excellent opportunity for new home buyers. A move-in ready home can be hard to find these days, especially on a budget. For many people, buying a home that needs renovations looks like an attractive investment. Here’s what you need to know about buying a fixer-upper.
Know What to Expect
Homes that need repairs tend to sell for less per square foot than homes in good shape. Because of the available bargains for new home buyers, a fixer-upper can be a good option for people buying their first home or those with a strict budget.
But before you start looking for bargains, you’ll need to know what you’re getting into. Renovations can be challenging, and projects that seem simple can become complicated once you start the demolition. Your costs might end up higher than you estimated, and finishing the job can take longer than you planned.
Fixer-Upper Mortgage Options for New Home Buyers
Renovation loans let you finance a house and the improvements all at once. With a renovation loan, new home buyers can pay off your project’s cost over a more extended period and with a lower interest rate than other types of financing. Options include:
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FHA 203(k)
The Federal Housing Administration offers FHA 203(k) loans that allow lower-income and credit scores than traditional mortgages.
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VA Renovation Loan
The Department of Veterans Affairs loan guidelines now includes the purchase and renovation of a new home for veterans.
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HomeStyle Mortgages
HomeStyle mortgages are guaranteed by Fannie Mae, and require a higher credit score than FHA 203(k) loans. However, almost any improvements may be eligible, including “luxuries” like a new pool or landscaping project that increases your home’s value.
A fixer-upper mortgage can help cover your mortgage payments if you can’t stay in your home while improvements are happening and often include extra funds in case projects exceeding the estimated cost.
The Satisfaction of Fixing Up a Home
While no question buying a fixer-upper is more work than a move-in ready house, the reward you get from creating your own unique home will more than match the effort you put in.
Once you finish, you will feel good about the hard work you put in, and you’ll enjoy the personal touches that make the home special to you.
Find the Right Mortgage Option for your Fixer-upper
Ready to start working on your fixer-upper home? Contact us today, and we’ll help you find the best mortgage solution for you!
