Buying a “fixer-upper” home has been trending for a few years, as witnessed by the popularity of home renovation TV shows. Taking a neglected house from a state of disrepair and modernizing and customizing it into a creation worthy of any home design showcase is highly satisfying. Marc Coons, the Paso Robles mortgage consultant has some important information for people who are thinking about buying a fixer-upper.
Buying a fixer-upper might seem like the answer to getting your foot in the door for an affordable home, too. That is often the case and works well for those who are handy with tools and construction and have some extra cash to invest in the project.
Buying neglected homes, remodeling, and reselling them is also a way for some people to make some extra cash. This group of home buyers usually have quite a bit of experience in this niche market and a proven track record that helps them get financing. Buying a fixer-upper might be more challenging for the first-time buyer.
Before rushing out and buying that run-down-looking home with good bones, here are a few things to think about:
- What is a fixer-upper?
- Is it worth the challenge?
- Can you finance it?
What is a fixer-upper?
Generally speaking, a house requiring extensive renovations or reconstruction is considered a fixer-upper. Exterior hints include visible roof damage, boarded-up windows, and other exterior damage and signs of neglect.
Real estate multiple listings often include terms like “bring your tool belt,” “needs TLC,” or “carpenter’s dream,” in the description.
A fixer-upper can also look pretty good from the outside, but once inside the view can be anything from huge holes in the walls, sagging ceilings, failing plumbing, and ruined cabinetry to relatively simple (but expensive) cosmetic repairs such as new appliances, new flooring, and some paint on the walls.
There are many reasons a home falls into the fixer-upper category, such as the owners were aging or ill and not able to keep up the maintenance or the home was damaged in some way and the current owner decided to sell it as-is rather than repair it.
Is buying a fixer-upper worth the challenge?
Low sale price is a huge attraction to buying a fixer-upper, but there are other considerations as well:
- What is the extent of needed repairs?
- Can you live in the house while the renovations are happening?
- How will a lengthy renovation project affect your family life?
- Will you have enough financing to afford the mortgage and renovations?
Renovations are most likely going to require building permits, and some aspects of the project may require hiring licensed professionals to pass inspection.
Can you finance a fixer-upper?
Yes. Financing is available for buying a fixer-upper home. A meeting with the Paso Robles mortgage consultant, Marc Coons, is going to tell you about your options.
A couple of mortgage options include:
FHA 203(k) Loans
Two types of loans from the Federal Housing Administration that include the purchase of the property and the cost of renovations are:
- Limited 203(k) loans for homes that need minor upgrades and repairs up to $35,000. Projects that are covered include remodeling the kitchen, painting the interior, and new flooring. Structural projects such as adding a new room are rarely covered.
- Standard 203(k) loans are for major renovation and construction projects and are overseen by an FHA-approved consultant. This loan covers major structural repairs like replacing the roof or plumbing.
VA renovation Loans
Active and retired military personnel may be eligible for a VA renovation loan. The VA rehabilitation loan allows veterans to purchase a property with 0% down and roll the cost of necessary repairs into the mortgage. The kinds of repairs are limited and don’t include major construction like teardowns and rebuilds.
Call the expert!
Before choosing a fixer-upper, make an appointment with the Paso Robles mortgage consultant, Marc Coons, to learn more and to get preapproved for a loan.
Marc Coons is a skilled professional who connects home buyers with lenders and makes the mortgage process run as smoothly as possible.
While it is possible for your to shop multiple lenders yourself, who has that kind of time? Even if you make an appointment with every lender in town, you are still limited by time and the number of banks and mortgage companies that are available.
As an experienced mortgage consultant, Marc and his team have access to a vast number of lenders, are not limited by location, and can quickly identify lenders who are willing to meet your terms. The speedier the negotiations the sooner you are in your new home!