In today’s busy market, many homebuyers have found themselves weighing options they would normally pass by.
One of the more common compromises is to consider a home that needs some work.
On the plus side, fixer-uppers often come with lower prices, less competition and a lower-pressure sale on the whole. Still, they’re not without challenges.
Are you considering a fixer-upper? Here are five things to think about first.
You may need an alternative mortgage program
If you want to finance the home purchase and the renovations and repairs the property needs, you might consider loans like the FHA 203(k) loan or the Fannie Mae HomeStyle loan. Your loan officer can help you choose the best option for your purchase.
There may be appraisal and inspection issues
If the home is in disrepair, you might face challenges with your inspection or appraisal. This is especially true if you’re using an FHA, USDA or VA loan, as properties must meet strict requirements with these programs.
You should have a backup living space
You might not want to end your lease or sell your existing home just yet. If the property needs serious repairs or renovations, you’ll probably need to live off-site until they’re complete.
You may want to bring a contractor along when you tour the home
This will help you gauge what repairs might be necessary and how much they’ll likely cost.
Be prepared for problems below the surface
Not all issues will be visible in a fixer-upper. There may be major problems lurking below the surface (like mold or termites, for example) that won’t crop up until later. Make sure you leave wiggle room in your budget to account for these potential surprises.