Buying a Fixer

www.JoshuaAndShelly.com

Have you ever seen the movie The Money Pit? This was a great 80's movie that shows an exaggerated reality of a couples not so great home purchase. Obviously, this is not the norm situation, even with a "fixer-upper". But you get the idea that they have gotten way in over their heads as far as their initial expectations about the home.These days with TV shows like, "Flip or Flop and "Fixer Upper", we all think that a home that needs work would be the best way to save some money on a purchase, but this is not always the case. Yes you might be saving money on the list price on a property that needs a little "TLC", as some realtors describe it, but there are other considerations that need to be made before you sign those purchase docs.

Get an Inspection from Someone who has Experience with these kinds of Homes

During the first few days of your buying process, you will have an inspection done on the property. They will look for all kinds of issues with the home and they will be able to give you a good idea of what you should expect as far as any future maintenance and immediate maintenance is concerned. This individual should have experience working with fixer-uppers because they will be best suited to tell you about the home's specific issues. As they walk through the home, make sure to follow them as they will be pointing things out that you may have otherwise missed with an inexperienced inspector. Also, make sure to have a list of your own with items on it you wish them to check. Such as: roof, plumbing, electricity, foundation, general structure, windows and doors. Don't forget to take copious notes. These are all pretty standard but since you are looking at investing a good amount of money to fix up, you will want to be sure to dot every "I" and cross every "T".

Adequate Funds Earmarked for Fixes

Decide what kind of a fixer you will be able to proceed with. There are different levels of fixer uppers ranging from, a full "gut job" to simple cosmetic fixes. In addition to the funds needed for your total purchase, including your down payment and closing costs, you will need to have banked a significant amount of money for these inevitable repairs. The last thing that you will want to do is assume that you will be able to just "live" with the condition of a fixer until you have saved more money down the road in order to rehab, that could be more than you bargained for.

Loans for Fixers

Depending on what type of loan you qualify for, FHA or Conventional, the bank will have to approve the condition of the home in order to lend to you. Typically they will send out their own inspector to see what type of condition the home is in. As far as FHA's are concerned, they are easier for buyers to get qualified for, but these types of loans can be tricky because the banks are much more critical about issues with the home. Most of the time, they will want certain fixes to be made prior to the close of your escrow. Conventional loans are a bit more lenient. This loan is harder to qualify for but once you have, they are much more forgiving about the lending requirements for the fixes of the home.

The moral to this story is Do Your Homework! Make sure your expectations are reasonable and you understand this type of home purchase and the possible pitfalls.