Should you buy a fixer upper?

by Washington Federal Team on May 6, 2011

In today’s real estate market, there are homes available for a great price if you’re willing to do the work to fix them up. Maybe it’s a foreclosed property that has fallen into disrepair. Or maybe it’s a new home that is partially unfinished. You’ll need to do your research and prepare before you begin to think about financing the project.

First you must assess the condition of the house to approximate the renovation costs. You can base the estimated costs on a thorough inspection, which will give you insight into the condition of the home and alert you to unforeseen costs. To gauge whether it’s a good investment, you should estimate the home’s post-renovation market value and measure this against the cost of the renovation. If the house requires significant structural improvements such as plumbing and electrical system overhauls or foundation upgrades, the construction expenses will likely be high.

If you’re considering buying a home that needs some repair, a rehabilitation loan may be the answer. Washington Federal has a mini-rehab loan that lets you borrow funds up-front to make smaller repairs. This could be a new roof, an upgraded furnace or the finishing touches for a new home. Rehab loans are usually available only for purchase transactions, not refinances. They’re a great option for first-time buyers or if you would like to make an investment in a rental property.

Many people use a home equity loan to pay for remodeling.  However, larger remodeling projects can sometimes out-strip your available equity, particularly if your home needs major work. If your fixer upper needs a little more fixing than most, our all-in-one construction remodeling loan could be the answer. This loan is based on the estimated value of your home after improvements. To hear more about your options, give us a call today.

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