For first-time homeowners, the cost of a new home can be overwhelming. Budgeting your down-payment and financing your mortgage may leave you worried. Can you afford a home in the neighborhood you desire?
However, you do have one option that can save you money: buying a fixer-upper. Before you make that investment, though, here are some things to consider.
What to Look for in a Fixer-Upper
Should you buy a fixer-upper? It depends. First of all, while it may save you money on mortgage payments, keep in mind that you will still need to make investments in repairs or upgrades, even if you do much of the work yourself.
Finding a fixer-upper in a desirable neighborhood can save you money, but remember, the lower the price, the more internal damage. That can be a real headache for a first-time homeowner. Search for fixer-upper properties in your area and see how prices compare to other home listings on the market. Keep in mind the average listing price for a home in Orem, UT, is $320,000.
When looking for a house, make sure you love the floorplan so that you do not have to do costly renovations updating the layout. Your best bet is to look for a home that needs cosmetic improvements rather than major overhauls.
This Old House recommends that if you do buy a home with challenging issues, you can always bundle a structural repair with a cosmetic upgrade, like adding a skylight if you’re replacing the roof. The Balance shares common fixer-upper repair cost estimates in this post.
The Buying Process
The advantages of buying a fixer-upper include both a lower price and less competition among buyers. But first, you’ll need to apply and get approved for a mortgage. Check your credit score first. If it’s not good enough, you may need help such as adding a co-signer or delaying your purchase until you can fix your credit. Investopedia has more options to try if you struggle with getting a mortgage.
Next, determine your mortgage budget. You’ll need to figure out both income and monthly expenditures. Keep in mind that if you buy a home that is larger than the space you live in now, your utility bills may be higher. Remember that you’ll also need a budget for maintenance, upkeep, and homeowner fees if applicable. Read more information about getting a mortgage and where to apply for one in this article at Money Under 30.
Tackling Home Repair and Design Projects
Depending on how intrusive the construction or updates will be, your first decision is whether to live in your new home while repairs are happening. If the updates are largely external or cosmetic, you can move in and save the cost of living in two homes at the same time. You may be able to stay in your home if:
- You are designing a kitchen or bathroom and have a spare.
- You’re not replacing floors, roofs, or structural supports.
- You are not adding a new room.
Before moving in, make sure you have the right power tools on hand for any cosmetic or minor projects, including drills, sanders, and jigsaws. For those updates, you can start on the outside. Inside, Do It Yourself recommends you start with walls, then floors and finally, move on to the details.
For major renovations, there may be permit requirements, so research the local regulations. Once the permits are in order, Think Realty advises moving on to foundational repairs followed by roofing. You should hire a home inspector after those updates are done and before starting any other interior projects to ensure they are done to code.
Buying a fixer-upper is a great way to save money in today’s real estate market, but you must be prepared for the work, costs, and commitment it will take to update your new house. Careful planning can help you achieve the home of your dreams.
Content Source: Bret Engle | DiyGuys.net