Why a fixer-upper could be the right move.
A lack of available inventory is a reoccurring issue across the housing market this year. People looking for a home may have a difficult time finding one that suits their needs without finding themselves in a costly bidding war or having to settle for what's available. We know firsthand how frustrating this can be for you.
There's another dimension to this search that's often overlooked, however. Sure, it's natural when looking for your dream home to want it all, the best of everything. This can greatly complicate achieving your goals. Instead, try the opposite approach: Find the property that's not as great, or in need of repairs, and make it your own through renovations.
There's an extra challenge in doing this, of course, but it has advantages. First, you can skip some of the stress of trying to go for the top-tier "Park Place" properties. Second, you'll wind up with a home that you've customized exactly the way you want. Lastly, it's your chance to take your home from last place to first place, with all the bragging rights that go along with it — and who doesn't love a good comeback story!
You should always talk to a loan officer to see what kind of loan program will work best for you, but we would recommend a close look at a government-backed FHA loan, especially if you are a first-time homebuyer.
In other cases, you might need to wait until a certain amount of the remodeling is complete before you can hang your hat there. Make a plan on where you're going to stay while all this is going on, and be sure to account for delays.
As with any building project with a lot of moving parts, delays can be pretty common. So, factor in at least an additional 20% of time so that you don't find yourself without a place to live while you're waiting for your renovated home to open its doors.
With all that said, if this unique road to homeownership is one you would like to explore further, please contact one of our loan officers today to get started. We're here to help!
There's another dimension to this search that's often overlooked, however. Sure, it's natural when looking for your dream home to want it all, the best of everything. This can greatly complicate achieving your goals. Instead, try the opposite approach: Find the property that's not as great, or in need of repairs, and make it your own through renovations.
There's an extra challenge in doing this, of course, but it has advantages. First, you can skip some of the stress of trying to go for the top-tier "Park Place" properties. Second, you'll wind up with a home that you've customized exactly the way you want. Lastly, it's your chance to take your home from last place to first place, with all the bragging rights that go along with it — and who doesn't love a good comeback story!
Financing your fixer-upper
So, here's something you may not know you can do: You can fold the cost of renovations into your mortgage loan. Let's say that you find a home for $200,000, but it needs about $50,000 worth of repairs. You can aim for a $250,000 home loan, so you're not paying the repairs out of pocket. Even with the increase, you may still wind up better off than if you went for the top property in the neighborhood.You should always talk to a loan officer to see what kind of loan program will work best for you, but we would recommend a close look at a government-backed FHA loan, especially if you are a first-time homebuyer.
Who gets the most out of it?
There are any number of reasons you might want to go this route. Here are just a few categories of buyers that may benefit the most from renovating a home to go from lackluster to blockbuster:- First-time homebuyers: Right now, it's not an easy environment to find your first house. Going for an underperforming property is, first and foremost, a way to get your foot in the door. Plus, with all the improvements you'll make, you are much more likely to improve the value of the home when you go to resell it.
- DIYers: For those who like rolling up their sleeves and creating something beautiful, this is a chance to do just that on a grand scale. Perhaps you want to handle some of the renovations yourself to reduce the overall cost over and above the regular mortgage price. A project like this, from flooring to ceiling, and everything in-between, is a golden opportunity to make your mark on every part of the home.
- Renters: Potential homebuyers aren't the only ones having a tough time these days. The price of rent in many places has gone up considerably and shows no signs of stopping. If you're one who wants to get off of the rent roller-coaster, bootstrapping a property up to your needs is a great way to put your money into something worthwhile while building up equity.
- Downsizing: If you are close to retirement age, or just need to find a smaller space for whatever reason, a fixer-upper could be for you. This way, you can tweak the new property to be exactly what you need and nothing you don't. If you fold the renovation costs into the loan, you could also save a large chunk of the money from your existing home sale.
- Investors: If you want to get into real estate investment, the core of flipping houses is to find a property, make improvements, then sell it at a profit. This method can be lucrative if done correctly, just be sure that the loan type you use does not require the house in question to be your primary residence. Once again, a loan officer can help you find the solution you need.
Living in the meantime
Renovations like this can't, and won't, happen overnight. It can take time to make all the repairs, even after you've closed on the house. In some cases, you may be able to move into the fixer-upper right away and watch the renovations come together around your living space.In other cases, you might need to wait until a certain amount of the remodeling is complete before you can hang your hat there. Make a plan on where you're going to stay while all this is going on, and be sure to account for delays.
As with any building project with a lot of moving parts, delays can be pretty common. So, factor in at least an additional 20% of time so that you don't find yourself without a place to live while you're waiting for your renovated home to open its doors.
With all that said, if this unique road to homeownership is one you would like to explore further, please contact one of our loan officers today to get started. We're here to help!