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What You Need to Know About Buying a House That Needs Renovations
Purchasing a home is a huge accomplishment that takes most people years of saving to achieve. Even after saving up for a down payment, many people need help to buy a home due to the high prices and limited availability of homes suitable for first-time buyers.
Buying a House That Needs Renovations
Some people buy a fixer-upper home because fewer homes are available in their budget or because the homes with everything they want are too expensive. Whatever the reason, many people are interested in homes that need some repairs—and more than half would be willing to spend more than $20,000 on renovations.
Remodeling your home can be expensive, but if you have a budget of $20,000, you can still make some significant changes. More extensive projects, such as renovating your kitchen or bathroom, will cost more. Almost all home shoppers hope to make some money back—or at least not lose money—on their home improvement projects. The right improvements can help increase a home’s value, while the wrong projects could lower the value.
Deciding whether it is worth buying a cheaper home that needs repairs should be one of the first things people do when purchasing a home. This can help set the tone for the entire home-buying experience. Being realistic about what you want in a home can make the dream of buying one more achievable- especially for first-time buyers. However, according to the survey, most people understand this—even if they are only partially willing to compromise when it comes time to buy.
Adding Renovation Costs to Your Mortgage
There are many different types of homes that you can buy, and each has its own set of pros and cons. One type of home that you might consider is a fixer-upper. These homes usually need repairs and upgrades, but they can be a great way to get your dream home. You can make these homes into your oasis with a little work.
Some consumers are hesitant to renovate their new homes due to uncertain project scope and affordability. Many wonder if they can add the renovation costs of their new home to their mortgage. The short answer is yes. The best way to choose the right rehab loan for your project is to contact a reputable lender for guidance.
2 Rehab Loans for Buying a Home That Needs Renovations
Here are your loan options:
1. FHA 203(k)
The 203(k) renovation loan is a government-backed loan that allows borrowers to purchase a fixer-upper or handyperson special home and include the cost of renovations in the loan. The Federal Housing Administration (FHA) insured the loan and can be used to finance renovations that are too expensive for a traditional home loan.
2. Fannie Mae HomeStyle
The HomeStyle Renovation Mortgage from the Federal National Mortgage Association (Fannie Mae) can be used for major home renovations, repairs, and improvements. The mortgage is available as a fixed- or adjustable-rate (ARM), and the original principal amount cannot exceed Fannie Mae’s maximum mortgage amount for a conventional primary mortgage.
The transaction type refers to whether the borrower is buying a new home or refinancing an existing one. If the borrower buys a new home, they can spend up to 75 percent of the home’s purchase price plus renovation costs. However, if they are refinancing an existing home, they can only spend up to 75 percent of the as-completed appraised value of the property.
Buying a house that needs renovations can be a daunting task, but it can also be a very rewarding experience. With a little research and planning, you can find a house that meets your needs and budget and can make your own.
Trademark can help you get the most out of your home with the best quality products and leading kitchen, window, and bathroom remodelers. Whether your construction project is a home build, home remodel, home addition, or a commercial remodeling project, we’ve got you covered. If you need home remodeling in Fresno, CA, give us a call today!