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Roll the Repairs into the Mortgage

by The Mike Parker Team

 

It's been said that if you can find a home that has most of what you want, you should go ahead and purchase it.  Many first-time buyers are using everything they have for a down payment and closing costs and would have to "live" with the less than perfect home until they can save the money to make the changes.

The FHA 203(k) mortgage allows a borrower to purchase a home and provides additional funds for improvements to be made.  These types of renovations can include kitchen and bathroom remodels, flooring, plumbing, heating and air conditioning systems, additions and other things.

The benefit to the buyer is that they have the opportunity to consider a home that needs repairs and might have been unacceptable without a program like this.  Being a FHA loan, a minimal down payment is required, fair interest rates and generous qualifying requirements.

The 203(k) Streamline can be used for cosmetic improvements, appliances and minor remodeling up to $35,000 in cost.

As you can imagine, this is a specialized program and not all lenders choose to make 203(k) loans.  They usually take longer to process and getting firm bids on the work to be done will be required.  It is important to find out how much experience a lender has with this particular type of loan.    

It will also be required that you work with a 203(k) consultant in addition to the mortgage officer.

For more information, go to Hud.gov.  FNMA has a similar conventional loan program called HomeStyle Mortgage.  Your real estate professional will be able to help with recommendations.  Call me at (859) 647-0700.

Buying A Fixer Upper!

by The Mike Parker Team
The definition of a fixer-upper is broad. It can be a house that simply needs "cosmetics" like fresh paint and updated fixtures - or a major renovation requiring foundation work and structural repairs. It's important that you assess your own abilities and interests before deciding to buy a fixer-upper. Some of the many questions to consider:

 

  • What skills (such as painting, carpentry or laying vinyl) do you have? Which are you willing to develop or pay for?
  • How much money are you willing to spend?
  • How long would you like the project to take? Sometimes the repairs to a fixer-upper can take weeks or months. Are you comfortable living in disarray for a period of time?

There are several possible advantages to buying a house in need of repair or remodeling. Many homeowners are able to buy the home for less than the market price. Plus you get the pleasure of truly becoming your own designer. You can choose paint colors that appeal to you, the flooring design/materials you like, and so on. 

A property inspection is recommended for any home purchase. When you're buying a fixer-upper, it's important that you consult with an expert who can give you a thorough report outlining which repairs or updates need to be done.

A home inspector or contractor may be able to help you prioritize the repair items. New homeowners who choose fixer-uppers are sometimes working with limited budgets and therefore are unable to address everything all at once. So what should be done first - roof repair, foundation work, electrical system upgrades or plumbing? Let the professional, and your common sense, guide you in terms of making this priority list.

Some fixer-uppers have "good bones" - meaning they're structurally sound and simply need to be updated or remodeled. For many first-time buyers, this is a wonderful entry into the process of fixing up property. Since you're not dealing with the larger structural issues, you're free to focus on cosmetics, such as updating flooring, applying fresh paint, installing new hardware in the kitchen and bath, or perhaps pulling out old carpet and redoing hardwood floors underneath.

Financing the repairs and upgrades can be accomplished in a variety of ways.  The interest on the cost of your improvements may be tax-deductible, and you have the luxury of being able to begin the renovations immediately. No reason to wait on updating that kitchen or putting in a new bath!

Some homeowners would prefer a home equity line of credit, so they can draw down the money as they need it, thereby only paying interest on the money they need. Similar to a home renovation loan, the interest on home equity loans and lines of credit may be tax-deductible.*

*Check with your tax advisor, some restrictions may apply

This article was taken from Wells Fargo.

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Photo of Mike Parker - CRS Real Estate
Mike Parker - CRS
HUFF Realty
60 Cavalier Blvd.
Florence KY 41042
859-647-0700