Are you shopping for a fixer-upper? Maybe you have already found the home of your dreams and it could use some work, or you are still searching. Either way, there are some additional considerations that go with buying a fixer-upper that you do not need to deal with if you are purchasing a home that is not in need of repairs and upgrades.
Tips to Help Navigate the Process
- Find out what you can borrow. A good starting point is to establish your budget. But you can only do that by finding out how much you qualify to borrow toward the purchase and repairs of the home. Seeking mortgage pre-approval could help you get these answers.
- Choose a simple, flexible mortgage product. You may not need to take out two separate loans when you purchase a fixer-upper. If you apply for a home style renovation loan, you may be able to bundle financing for the purchase, repairs and upgrades into a single mortgage. Not only may this make it faster and easier to buy the home and move forward with your work, but it also means you may only need to deal with one set of closing costs and interest on a single loan.
- Shop within your financial budget. After establishing your budget, you should make sure that the home you purchase falls within it. Come up with detailed estimates for all of the work you will need to do on the home. Make sure you are accounting for both your short-term and long-term projects.
- Shop within your work budget. While you will probably spend quite a bit of time looking into the financial ramifications of purchasing a fixer-upper, considerations relating to time and effort can easily fall by the wayside. Even if you are going to be hiring professionals to handle everything, there is still quite a lot of time and legwork involved. And if you are going to be doing some or all of the work yourself, then you are going to be investing even more hard work. Make sure you are not biting off more than you can chew.
- Overestimate your potential costs (in time and money). Whatever you estimate you will spend in time, money and labor on your fixer-upper, it is wise to assume you have undershot the total. Tack on around 20% to your estimate. That way, you could reduce the risk of finding yourself in over your head. And if you end up not needing to spend that extra money, great—you will have some money set aside that you could use for other improvements or repairs in the future.
- Get a specialized inspection.The appraisal and inspection requirements for a fixer-upper will depend on the type of mortgage for which you are applying. Regardless, a regular home inspection may not cut it. A fixer-upper is going to have a wide range of potential problems that a standard inspector could overlook. Instead, work with a specialized inspector such as a contractor. That person will be able to give you a more thorough and accurate assessment of what work the home may need.
- Do not forget about permits. Depending on the type of work you want to do on the home, you might need to apply for permits. Different jurisdictions have their own regulations as well, so look up what you require in yours.
Buy Your Fixer-Upper in Boston or Beyond Now
To apply for a home style renovation loan now, please give us a call today to schedule your consultation. During your consultation, we can offer you additional guidance on the process of purchasing and renovating a home. We can work with you in Boston or anywhere in Massachusetts, Rhode Island and Connecticut.
This information is intended for informational purposes only and is not an offer to lend. All applications are subject to credit approval.