Tips for Buying a Fixer-Upper
There’s an axiom in the real estate industry that says we should forego buying the nicest home in a bad or borderline neighborhood and go for the worst home in the best neighborhood we can afford. This is because the sales prices of surrounding homes determine the market value of yours, so buying in a more expensive neighborhood, even if it’s the worst home on the block, ensures the future value of your home.
This may mean that you are purchasing a home with problems, from minimal to horrendous. Does that scare you? It shouldn’t. Read on to learn how a fixer upper house may just turn into your dream home.
Yes, you can afford to fix it!
Even buyers on the tightest of budgets can afford the repairs required to fix up a home so that it’s livable. Talk to your lender about obtaining a FHA 203(k) loan. This government-backed loan program is geared toward buyers that intend on living in the home and it has additional requirements as well.
If you qualify, however, you’ll be able to wrap the cost of the repairs into the mortgage and your first payment isn’t due until you actually move into the house. It’s an amazing program that the buyer can use to put on a new roof, new plumbing, floors, landscaping and more.
Only certain lenders are qualified to offer the program and you can find these on the U.S. Department of Housing and Urban Development’s (HUD) website. Ensure that you tick the box next to “203k,” at the bottom of the list.
What to look for
As you tour fixer uppers, be on the lookout out for the following conditions:
· Rodent pings, insects and signs of termites.
· Floors that slope, jagged cracks in the foundation, negative grade (when the yard slopes toward the home instead of away from it.) These may be signs of structural problems and you’ll want an engineer to inspect the home.
· Outdated wiring.
· Cupped or missing roof tiles.
Of course, these conditions aren’t deal-breakers; they’re just a bit more costly to repair.
Don’t let ratty carpets, ugly paint colors or shoddy decorating turn you away. Buying a fixer means that you’re getting a home with possibilities ― at a price you can afford.
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