Buying a home that needs renovations can often be complicated and may be costly. Repairs can drain your savings and sometimes you find more costly repairs than you expected. There are ways to finance both the purchase price and repairs in one loan.
An FHA 203K loan can save you time and money. There are two types of 203K loans, a streamline and a standard 203K. Which one you choose will depend on the type of work you need done. A 203K streamline can be quick if your home doesn’t need major repairs and the maximum repair amount is $35,000. If you need major repairs, you will need a standard 203K. With a standard 203K, you need a minimum of $5000 in repairs and you will need a HUD consultant that works with you inspecting the property and manages the project.
There is also a conventional rehab loan that allows you to finance your repairs. Both FHA and conventional loans will require you to get bids ahead of time so you know the final cost for your mortgage. Both require licensed contractors to do the work.
Why should you look at a fixer upper? There are reasons to look at buying a home that needs some work. You can usually get more home for your money. If you have the ability to do the work yourself, you can save money but that is typically not allowed on a rehab loan.
What are reasons for not buying a fixer upper? There will probably be unplanned expenses and that can throw off your budget. You may be living in a construction zone if you decide to do the work yourself or if you are living in part of the home while the work is being done.
If you have found that perfect home that needs work, get an inspection and look into a rehab loan. It may be a way to get that perfect home with your own personal touches added to it!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
