Should You Buy a Fixer-Upper Home?
Not sure if owning a fixer-upper is for you? Here are some considerations to think about:
How Much Will a Fixer-Upper Cost You? To get a ballpark idea of how much a fixer-upper will cost, start with the likely market value of the house after renovations will be made and add in the total cost to renovate the home. Then, add in another 25 percent to the renovation costs for any unforeseen problems that will no doubt come up during the renovation process. Finally, subtract the renovation costs from the probable market value of the house after the renovations are made. This will give you a rough figure of your break-even point.
Determine How You Will Pay. If you buy a fixer-upper, you’re going to need some way to fund the renovations. Some options for funding renovations include a renovation loan, like Fannie Mae’s HomeStyle Loan. Another option is an FHA 203(k) loan. This loan is a little easier to qualify for than the HomeStyle Loan and it only requires 3.5% down. If you’re considering buying a fixer-upper, you’ll definitely need to talk to your mortgage professional to see what options are available to you.
Decide If You Want to Invest the Time. Buying a fixer-upper is not just a financial investment—it’s also a time investment. Whether you use contractors or decide to do the work yourself, buying a fixer-upper requires a huge amount of time. Not only will the work itself be time-consuming, but you will also have to invest your time in planning out the process and making a lot of decisions. You’ll need to put in plenty of hours getting a master plan together and deciding on things like materials and aesthetics.
Although a fixer-upper is not for everyone, it can be a rewarding endeavor as long as you know what you’re getting into ahead of time. As always, your best resources will be your trusted real estate agent and mortgage professional.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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