The Advantages of Buying Fixer-Up HomesFixer-upper homes can be an excellent choice for some homebuyers, especially those purchasing a starter home. Some of the advantages of buying fixer-up homes include:
- House prices: Houses that need significant repair work or require major renovation are often much cheaper than homes of a similar size or in a similar location. There may also be more room for price negotiation with these properties.
- Location: Purchasing a home in less-than-perfect condition can be a great way to buy into a neighborhood that would otherwise be unaffordable.
- Creativity: Everyone has her own idea of what makes the perfect house. A fixer-upper allows you to bring your vision for your home to life.
What to Look For in a Fixer-Upper HomeBefore signing on the dotted line, you’ll want to arrange for a home inspection, which can identify potentially serious problems that aren’t readily apparent. Depending on the scope of the problem, anything found during the home inspection may help you negotiate a further reduction in price. When viewing the fixer-upper, keep your eye out for the following:
- Rodent and insect infestation: Look for mice droppings, roaches, mud emerging from cracks (a sign of termites), and other signs of infestation. Firewood piles stacked against a house can also present a haven for termites.
- Structural problems: Sloped floors, leaning walls, or cracks in a home’s foundation can all be signs of serious structural problems that can be quite expensive to fix.
- Wiring: Old wiring may need to be replaced, a potentially costly repair.
- Drainage problems: Ideally, the ground on the property should slope away from the house. Poor drainage can cause dampness in basements, flooding and other issues.
Wondering How to Finance a Fixer Upper Home?So, after laying out the money for the down payment and then the closing costs, how to finance the repairs or renovation on a fixer-upper home? Fixer buyers use many creative ways to finance the work, from credit cards to borrowing against their 401k plans.
You may be able to get a home equity line of credit (HELOC) based on the future equity you’ll have once the house is repaired. Talk you your accountant or attorney about the pros and cons of HELOCs.
The U.S. Department of Housing and Urban Development (HUD) offers a program for the purchase of fixer-uppers that includes the repair costs in the mortgage loan. Known as the FHA 203(k) program, it’s only available from certain, HUD-approved lenders and to borrowers who intend to live in the home.
Buying a fixer-upper is not for everyone, but for those with the patience to deal with renovating, it can be an economical way to purchase a home. For help findig your dream home at the lae, plct the Spouses Selling Houses team. Until next time. Ebbie :)