Read This Before You Buy A Fixer-Upper

So, you want to buy a fixer-upper? Before you get too excited about buying a home that may need some additional work, take some time to think about how that may affect what you’re able to borrow. Your first step before putting an offer in on any home, is to get it inspected. The last thing you’ll want to do is spend the next 30 years overpaying for your house. Here's what you should consider.

What Do the Lenders Think When You Buy a Fixer-Upper?

Most sellers will not want to take the burden of fixing certain issues upon themselves, which is often best for both you and the banks. Depending on the loan that is taken out, you may be required to make sure the home is already in livable condition. Most banks will also only finance based on the current condition of the home, not making allowances for improvements made after buying.

Here's Why You Always Need to Hire an Inspector

The easiest way for all parties involved is to hire an inspector, while both you and the sellers are present. Discuss the changes to be made and if there’s a way to lower the price because of the improvements and adjustments needed. This means that the bank won’t decrease the loan amount, but you’ll use less, therefore having more left over to complete the work.

Final Thoughts

Homes in need of repairs are often an amazing investment for carpenters and handymen, if you are willing and prepared to put in the sweat equity. But, there are certainly potential downfalls. Just make sure you know exactly what you're getting into before you take the plunge.