19
Aug
By Fred Gruber
Mortgage Tips

The Mortgage Options That Make It Possible to Buy a Fixer-Upper

Buying a fixer-upper can be an exciting way to get into a desirable neighborhood at a lower price point, while also creating a home that reflects your style and needs. However, financing a property that needs significant repairs can be challenging if you are only looking at traditional mortgage products. The good news is there are several mortgage options designed specifically for buyers who are ready to take on a renovation project. Understanding these options can help you choose the right path to turn a home with potential into your dream property.

FHA 203(k) Rehabilitation Loan
The FHA 203(k) loan is a popular choice for buyers who want to purchase a fixer-upper and finance both the purchase price and the renovation costs in a single mortgage. Backed by the Federal Housing Administration, this program has more flexible credit requirements than many conventional loans. There are two types of 203(k) loans: the Limited 203(k) for smaller projects such as replacing flooring or appliances, and the Standard 203(k) for major renovations like structural repairs or room additions.

Fannie Mae HomeStyle Renovation Loan
The Fannie Mae HomeStyle Renovation loan allows you to borrow based on the  as-completed  value of the home, which is the estimated value after the renovations are finished. This loan can be used for a wide range of improvements, including luxury upgrades that FHA loans do not typically cover. Since it is a conventional loan, you may need a higher credit score than with FHA, but it offers competitive interest rates and can be used for primary residences, second homes, and investment properties.

Freddie Mac CHOICERenovation Loan
The Freddie Mac CHOICERenovation loan is another conventional option that can be used for repairs, upgrades, or even renovations to help a property withstand natural disasters. Like the HomeStyle loan, it is based on the post-renovation value of the property. It can also be paired with certain affordable lending programs to make the upfront costs more manageable.

VA Renovation Loan
For eligible veterans, service members, and certain surviving spouses, the VA Renovation Loan provides an opportunity to finance both the home purchase and repairs under the benefits of the VA loan program. This means no down payment in most cases and favorable terms. However, not all lenders offer this product, and the renovation work must be completed by VA-approved contractors.

Why Renovation Loans Make Sense
Renovation loans not only make it possible to buy a home that might otherwise be out of reach, they also give you the flexibility to create a space tailored to your vision. By rolling the cost of improvements into your mortgage, you avoid the need for multiple loans or high-interest credit cards to pay for repairs. In addition, the value of the home often increases after renovations are completed, which can improve your equity position more quickly.

If you have found a home with good bones and the right location but it needs some work, one of these renovation loan options could help you transform it into the home you have always wanted. The key is to work with a mortgage professional who understands the specific requirements of each program and can guide you toward the option that best fits your needs and budget.

21
Jul
By First Rate Financial Group
Mortagage Tips

Should You Buy A Fixer Upper?

Should You Buy A Fixer Upper?If you’ve expressed any interest in buying a home that you can work on, your real estate agent may present you with one or two fixer upper properties for your consideration. Fixer upper homes can offer good value for certain kinds of homebuyers.

But not everyone should buy a fixer upper. Here are some considerations to keep in mind.

There May Be Unforeseen Conditions

Until you actually get in there and start renovating, you cannot know exactly what is behind those walls. Fixer uppers could have unforeseen conditions that could blow away your renovation budget.

If you do decide to forge ahead with an offer, consider hiring a structural engineer, a pest control technician and a mold expert to carefully inspect the property first.

Will You Be Able To Live There During Renovations?

Sometimes a fixer upper requires a complete overhaul. Other times there are a few inhabitable rooms you can stay in while completing the rehab.

Consider whether you and/or your family can be comfortable during the work, or if you will need to rent an apartment or stay with family.

This will heavily impact your fixer upper experience.

How Handy Are You – Honestly?

This is the time to be really honest with yourself. How much of the work can you actually do? Are you a wannabe handyman, or do you truly possess the skills and experience to complete quality work? If everyone you know is astonished that you want to work on a fixer upper house, it is a smart idea to take stock of your abilities. 

Can You Afford To Hire Workers?

Just because you buy a fixer upper does not mean you have to do the work yourself, either. Maybe you have the money to hire a contractor or workers to get the job done. If hiring others is part of the plan, make sure you budget accordingly. Do not forget to budget for the unexpected because with a fixer upper, you can expect the unexpected.

Finally, if the only house you can afford is a fixer upper and you really want to buy now, then maybe you should go for it. After all, when you finish the rehab, you could be in a position to take some equity out of the house after a new appraisal.

For the right person in the right circumstances, a fixer upper can be a viable choice.

 

04
Jan
By First Rate Financial Group
Real Estate

Should You Buy A Fixer Upper Or Move-In Ready Home?

Should You Buy A Fixer Upper Or Move-In Ready HomeThere’s a lot to be said for buying a move-in ready home. All you have to do is put your things away and start living your life. On the other hand, buying a fixer upper has its advantages, too. You can get a great bargain on a fixer upper home. So which one should you choose?

Here are some things to consider.

You Can Easily Afford To Buy What You Want

If money is no object, then a move-in ready home is the best choice. You’ll be able to get exactly the home you want with little or no effort decorating it the way you want. If you’re the kind of person who can hire an interior decorator, then you’ll likely want to spend time decorating, not reconstructing.

You Like A Challenge

If you think of owning a home as an adventure rather than a convenience, consider buying a fixer upper. You’ll have lots of interesting challenges, like figuring out where to buy those non-standard replacement windows, how to reinforce a floor for a tile installation and much more.

You’re Older And Just Want To Settle Down

Renovating a fixer upper requires energy and strength. If you’re older or you tire easily, buying a move-in ready home might be a better strategy. A fixer upper might be too much to handle if you attempt all the work without professional help.

Money Is Tight

If you feel you would be strapped financially to buy a move-in ready home with all the bells and whistles, consider a fixer upper. You’ll be able to easily handle the mortgage payment. You’ll be able to renovate on your own schedule, according to when you can afford new building materials.

You’re Looking For An Investment

If you’re looking to get fast equity out of your home purchase, a fixer upper is definitely a smart move. Once you complete the renovations you could refinance on the higher value and bank the profits.

As you can see, fixer uppers and move in ready homes are both good values, depending on your own situation. Hopefully this list of pros and cons will help you make the right choice for your lifestyle.

Your trusted mortgage professional is available to go over your financing options and get your pre-approval ready for when you find your perfect home.