Fixer-Uppers for First Time Home Buyers
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For first time homebuyers, the high cost of a mortgage can be daunting. If you’ve been out looking at properties, you may have realized that you cannot have your dream home in your ideal location.
But what if you could? You may be able to have the perfect home in the right location if you are willing to invest in a fixer-upper. Here’s what you need to know.
What You Will Need
Buying a home that is not picture perfect will save you money, but you must try to make a sound investment. You want to make sure that the house does not have structural damage that will end up costing you more than you saved.
Here are some questions you should ask yourself first:
- Do you have a strong relationship? According to this article from BobVila.com, renovations and home buying can put a strain on a relationship, especially a new marriage.
- Do you have any DIY skills? While it’s perfectly fine to contract all your work out, it might actually cost you more than you’ll save. Don’t invest in a fixer-upper unless you have both the skill and time to do the minor updates, like painting and landscaping.
- Do you have the right tools? A fixer-upper may come with some unforeseen “small” issues to fix, so you should have the right tools for each project, such as drills, sanders, jigsaws, etc.
Lifehacker has more advice on what to look out for when choosing your fixer-upper property.
Budgeting for Your Home
First-time homebuyers have plenty of planning before getting a mortgage. Start by learning your credit score to determine the range of your loan approval. Get an idea of your budget by totaling up all your income and assets. Then, deduct your monthly expenses. Now, consider how much upfront budget you have for down payment, closing costs, lawyers’ fees, and moving costs.
Remember, if your house is larger than where you now live, your monthly utility bills may be higher. You may have homeowner association fees, and you will have regular maintenance costs. If this sounds daunting, read this post from Trulia to make sure you are ready to buy a home.
Finally, it’s wise to get an idea of local home prices. Homes for sale in Troy, MI have a median listing price of $350,000. Consider how much extra you’ll need beyond your mortgage for updates and renovations.
Remember, you can’t add the cost of major renovations into a standard mortgage. You can only get a loan for your home’s worth. According to Interest.com, there are two programs available that may be able to help: Federal Housing Administration's 203(k) mortgage and Fannie Mae's HomeStyle Renovation mortgage. Each has different requirements, so read the article to discover if you qualify.
If you don’t have immediate repair needs and are shy on budget, you can save up for them as you go along. But beware: Older homes can have more problems. This writer at Apartment Therapy shares how the budget she saved from buying a fixer-upper went right back into basic repairs directly after moving in.
Prioritize repair projects by what needs to be done to make the space livable and what can be done after you move in. For example, outdoor work and renovations in spare or duplicate rooms (like bathrooms) can be done while you are there.
Think about seasonal needs too. For example, if winter is approaching, make sure your home has working heat and adequately sealed doors and windows. Do major renovations and any structural work, such as roofing, before you move in if possible. Finally, design elements, like paint and details, should be done last.
Buying a fixer-upper for your first home can seem daunting. However, with proper planning and a realistic budget, you can build your dream home and save money along the way.
This article was written by Bret Engle from DIYguys.net. If you're interested in learning more about how to do your own home repairs and updates, be sure to check out their site. They have a wealth of knowledge in their blog. Thanks, Bret!
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