So you’ve found your dream home, but it needs some TLC. Here are three things to consider while financing your fixer-upper.
Make sure you’ve had an unbiased home inspection before you begin. Then locate a licensed and experienced contractor. These two variables can make or break your home improvement plan. So take your time while researching your options.
Create Your Budget
No matter what financing option you choose, you will have to write up a budget before appraisal. Your contractor’s improvement estimates guide your budget. Be realistic with your contractor about the home-rehab you’re planning, and you’ll be one step ahead in your budget book.
Know Your Options
The most common financing option for full-on fixer-uppers is known as the renovation mortgage. This form of mortgage compiles your regular mortgage with your estimated improvement expenses. Two of these are the Federal Housing Administration’s 203(k) mortgage and the Fannie Mae’s HomeStyle Renovation mortgage. Renovation mortgages have strict guidelines and varying requirements, so you’ll need to familiarize yourself with them before making your decision.