2020 is here. The year started with a bang, with one trade war ending, another possibly brewing, and with scatted stock market prices along with rising temperatures and even a newly discovered virus that’s got everyone squealing. This has got a lot of economists and financial analysts a bit wound up, wondering what the year will bring.
How will these things affect the financial futures of everyone? Is it a good year for a house? Only time will tell.
While the exact direction of the economy may currently be a mystery, one thing is for sure. What’s that you may ask? It is that now is a better time than ever to invest in an old and seemingly hopeless house. Made famous worldwide with the help of TV programs, investing in a ‘fixer’ could give you the best bang for your buck, giving you a secure investment that you could fall back on further in the future.
It is expensive and seemingly unreachable homes that are slipping in value this year. This is a pattern that is expected to strengthen in the years to come. A recent survey from the webpage Realtor.com has revealed surprising numbers, showing that many young first-time homebuyers are turning toward purchasing homes that need a little TLC. Some of the reasons behind this change may be due to the ‘trendy’ appeal. Other causes are based on added value. It may be easy to picture the perfect home, but, it is not always as easy as it seems. Want to keep from making an investment mistake that could leave you high and dry? Below, we have some pointers from buyers that took the plunge and decided to pass on their knowledge of things they wish they’d known before.
A ‘fixer’ could be the road to owning your own home
Buying a home is not something easy. These days it is hard, with swarming debt, wages that won’t seem to budge, and a shaky economy. All of these mingle together to create an unstable market, leaving some buyers without much choice. There is, however, some good news, especially if you’re willing to get your hands dirty.
You see, a house that needs some work typically comes with a lowered price tag, meaning less of a loan, and less of a down payment. Of course, some homes will cost just as much if not more in repairs; this is why it is crucial to think and buy smart. If you believe you have what it takes to make a lumpy mess into a home, you could be saving a ton, and the banks will still be there to back you up. Banks these days will accept scores in the 500s, and there are some down payment percentages as low as 3%.
Be picky with your mortgage
Don’t let all the financial talk make your head spin. Become an informed buyer, learning the differences between different types of renovation loans and which ones work best for you and your budget. What exactly is a renovation loan? Well, it is one which allows you the opportunity to finance both the house you’re buying, and the renovations expected all in one place. Here are a few types of renovation loans with easy to follow explanations, leaving out all the fancy words and getting down to the point.
- FHA 203(k): Coming straight from the Federal Housing Administration, these loans accept a more extensive range of credit scores and incomes, and are a popular option for those who’re wanting to purchase a good ‘fixer.
- VA renovation loan: Veterans out there will be happy to hear that there is now an updated opportunity to purchase a renovated home. You will need to find a VA-approved contractor, and your options may be limited, but the financing is excellent.
- HomeStyle: If you’re one of the lucky ones without credit issues, this is a fantastic loan backed by Fannie Mae. This is an excellent loan for both renovations to old homes of luxurious renovations to put together already homes.
Don’t take on more than possible
Let us just be frank; we are not all as crafty as we think we are. The guys on popular ‘fixer-upper’ TV shows make it look easy and fun. While the fun part is true, the easy part is far from it, especially if you’re not the ‘jack of all trades’ type. Take a good luck at the house you’re thinking of buying. What needs repairs and how will you repair it? Look at all the essential and functional things like foundation, plumbing, and infrastructure. If these things are in shambles and it’s a total dump, you might want to hire a professional to give it a look first. Don’t let your enthusiasm fool you.
We will say, however, we’re not here to burst any bubbles. If you want to do it on your own, you can; be sure to know what you’re in for. Renovating is tremendous and can be rewarding in the end, but don’t bite off more than you can chew.
Beware of the big bad lender
You have been forewarned about the appearance of the appraiser. Unfortunately, renovating a home could mean that your new vision of a home may have to undergo several appraisals, with not only the house itself but also the renovations you’re hoping to make. While it is frustrating and some are stricter than others, it is essential to know that this is expected when purchasing a home and taking out a loan.
Just do it
At the end of the day, investing in a fixer can be a fun and rewarding experience. You will not only get to call it your home but live with the pride that you designed parts all on your own and to your liking. Be sure to keep these things in mind before you purchase your new hunk of junk, we mean, work in progress!