With a fixer upper, you are presented with the opportunity to make the home more valuable. Many times, you will find this kind of home at approximately 8 percent below market value. You will be paying less in taxes as well because the taxes are calculated based on your home’s sale price. So, how do you even go about finding your ideal fixer upper? Read on below for more information.
The Perfect Choice
It is often said that the perfect fixer upper is one that everyone will want to own in the future, but no one wants it right now. The location is going to play a key role in your selection. Make sure the home is in a desirable location or an up and coming neighborhood.
The layout of the home should also flow and have a good configuration to start with; otherwise, you may find yourself spending even more money to move and take down walls.
Choosing a Mortgage
When you choose this kind of home, there are different mortgage loans to consider because of the condition of the home. Renovation loans, for example, allow you to finance the home while also making improvements at the same time.
The improvements you make can then be paid off over a longer time and typically at a lower interest rate than with other types of financing.
Another type of loan is a construction loan. It is a more short-term option and often comes with a higher interest rate, but it provides the owners with the funds they need to build and renovate the property.
Before you can consider this type of loan, however, you need to find a qualified builder, have your minimum 20 percent down payment, and have the value of the property in its current condition appraised.
Since more and more buyers are looking to purchase newer and updated homes, you will find little competition when it comes to the fixer uppers that are available. However, instead of competing with other buyers, you are often competing with builders and investors which can drive the price up.
When choosing a fixer upper, make sure you understand your needs and make sure the home is what you are looking for. Depending on the renovations that need to be done, it can be a time-consuming project.
Finally, keep in mind that the property taxes will go up following the renovations because of its new value. If you remember all this info and you know where to draw the line, and you can envision the home’s potential, then you are ready to start your journey towards finding the perfect fixer upper.