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Buying a fixer upper can reduce the cost of your first mortgage but before you invest, you must be informed. Let’s look at what first-time homebuyers need to know.
Determine If A Fixer Upper Right For You
Before jumping in, you should make sure that a house in need of renovations is a good fit for you. Buying and renovating your first home are stressful activities so you’ll need to determine if you can handle that pressure. If you’re buying it with someone
else, make sure your relationship can weather the project. This may be an extra challenge for newlyweds!
You’re also going to need some DIY skills. Fixer uppers require more TLC than your average home. However, hiring a contractor for every repair is not cost-effective. Have the right tools on hand for each project or emergency, such as drills, sanders,
Finally, make sure you have the time you need to invest in the renovation. Check out what else you need to know in this post
Budget and Mortgage
While you are saving on your mortgage with a fixer upper, you are also investing in design and construction. Sometimes, the act of demolition reveals problems that couldn’t be found in the typical inspection. This will require some wiggle room in your
budget. For tips on setting a realistic budget, read this article
from Quick and Dirty Tips. You can also try this calculator
at Buying a Fixer Upper to help you determine needs and costs.
First-time homebuyers may have the biggest struggle with getting a mortgage. You should plan as far ahead as possible with this step. Start by getting your credit score, as this will impact your mortgage approval, amount of loan and interest rate.
You can qualify for very few loans with a score of 500; however, scores above 620 or 660 are more likely to be approved and will have lower interest rates according to SmartAsset.com
. If this is a problem,
you should probably wait and try to fix your credit score first.
Your next task is to figure out your monthly income and expenses and how much you have available for a down payment and closing costs. Remember to figure in any fees such as homeowner’s association dues, maintenance costs such as lawn care and higher
utilities if you are buying a larger home. Finally, figure in home insurance and property taxes and determine whether or not you will hire a real estate lawyer. Don’t forget to add renovation costs to your budget. They cannot be part of your mortgage,
but there are a few loans you might qualify for that can help.
When seeking a fixer-upper, your top priority should be location. Avoid homes with major structural damage and those that are old. Check locally for average home prices. How does that compare to the cost of local fixer uppers? For example, homes for
sale in Nashville, Tenn., have a median listing price
Renovating Your New Home
Once approved, plan your renovations. First, determine whether or not you can live in your home during construction. MassLive
has some simple
advice if you are living there: Start renovations in the bedroom so you’ll have a comfortable place to sleep.
Your next choice might depend on budget. If you have critical changes, do those first unless your wallet isn’t ready. We recommend having enough budget on hand to address those challenging issues before you purchase a home.
If you’ve done a great job and the local housing market improves, you might want to consider selling your home right away. Here is some advice
on what you need to know first from
Buying a fixer upper requires time, patience and DIY skills. If that sounds like you, take the time to plan ahead to invest wisely and design your dream home.
Bret Engle | DiyGuys.net