Buying a Fixer-upper as your Dream Home
How can a home that needs repair turn into my Dream Home. There are several ways to make this happen. But right now, in the housing market the really nice homes that have been fully upgraded are selling fast and 33% of the time for over asking price. So, unless that home is your Dream Home you have to keep looking.
With the nicer homes going so quickly there are many potential homeowners who want a home but can’t find one in their price range. Maybe a home in need of repairs is the answer. You may not be aware, but there are loan options available.
Conventional Loans, FHA Loans and VA Loans offer what they call “Rehab loans”. What this means is when you find a home that may need some repairs/upgrades to make it your dream home, they will loan you the money, at time of purchase and give you time to do the upgrades. So, if you find a home that needs a paint job, or the kitchen to be upgraded or new flooring or bathroom upgrades or a finished basement, these loans are available. Because of there current condition you will be able to purchase them below market price, finance in the repairs in the original purchase loan and then finish the home to make it yours. The Lender will appraise the home at the finished price. This means since you are upgrading the home your value may increase more than what it cost to make the improvements. Now you have your Dream Home.
What if you already have a home and have thought about upgrading but don’t want to use your savings or investment accounts. Lenders allow you to present your plan of upgrades and when you do the loan the value will be determined by the upgrades being completed. So, let’s say your home has a value of $600,000 with a loan amount of $400,000 and you want to put in a new kitchen – cabinets – appliances – flooring throughout – upgraded bathrooms and a finished basement. Let’s say the cost for all of this is $100,000. The way it works is when you provide what is called the line-item list of what is to be done and the cost from the contractor and when the home is appraised, the value will be that of your home finished.
So now your home would appraise for $660,000 – $690,000 and your current loan amount would be your current payoff ($400,000) plus the upgrades ($100,000) for a new loan amount of $500,000. Your loan value would be less than 80% and you would have the home you have been wanting for years.
I have a client that has lived in their home for over 20 years and love the neighborhood and the home but wanted to do some major upgrades. They are going to increase the footprint of the home by more than double. We are able to help them make the home, the one their entire family grew up in with all the memories and now make it their forever home.
So if you like your home, you like the location, the neighbors and do not want to move, there are solutions. Call us at 720-895-0500 and let us show you how to have your Dream Home.
Disclosures: NMLS 298191, Regulated by Dora, Equal Credit Lender AZ NMLS MB1021756, WY MBL 4594