 Buying a fixer-upper may seem appealing since the price point is usually much less than a newly remodeled home—and you can remodel it into your dream home. But sometimes the cost of repairs outweighs the initial savings, and fixing the home requires much more work than anticipated. Before buying a fixer-upper consider these points:
Do You Have the Skill? Many people buy a fixer-upper with the intention to renovate it themselves. Unfortunately, most find that they are not as skilled as they imagined. If you are not an experienced DIYer, you may need to hire a professional to get good results. Do You Have the Patience? There are drawbacks during the remodeling process, especially if you plan to move in immediately. Dust, noise, and unfinished rooms can make the living space uncomfortable. If you work from home, expect frequent interruptions by contractors and power tools. You may need to go without your kitchen or a bathroom while they’re being finished. Can You Wait to Move In? When most people buy a home, they want to move in as quickly as possible—perhaps they’ve just sold their previous home or their lease is about to expire. But major repairs can mean waiting weeks or months to move into a house. If you are able to wait an extra month or two while renovations are being made, then buying a fixer-upper won’t be too inconvenient for you. Can You Afford Repairs? Renovating a home can be expensive. Weigh the amount of money you’ll spend on labor and materials versus the return on investment. Remember, remodeling projects often go over budget. After you have calculated the costs of the renovations, add 20% more to make sure it’s in your price range Will It Increase the Value? Houses that need major fixes might not be worth renovating. If something essential such as plumbing needs to be replaced, it won’t necessarily increase the home’s value. Remember, too many improvements can mean you won’t get back the money you invested. Always plan your renovations according to the price of other homes in the neighborhood. If you are experienced with remodeling or can afford to pay professionals, buying a fixer-upper can be a good investment. But if you dislike dust and noise and need to move in immediately, then a turnkey home is a better option.
0 Comments
 When it comes to getting a home loan, three of the most dreaded letters are PMI. Those three seemingly harmless letters stand for private mortgage insurance, and borrowers have been conditioned to be wary of it.
PMI is a lender’s way of reducing its risk on mortgages that are secured with less than a 20% down payment. The cost is an annual premium that’s typically 0.5% to 1% of the entire loan amount on an annual basis. PMI has become something homebuyers mostly try to avoid because they’ve been told that having it is like throwing money away each month. Consider these points. PMI Gives More People the Opportunity to Be Homeowners Putting down a large down payment does save money on interest over time, but most buyers will not be able to put down 20% on a home, especially since home prices keep rising. PMI gives buyers who don’t have a large chunk of cash savings a way to get a mortgage and start gaining equity in their home. PMI Can Be Canceled When Your Home Equity Is Over 20% PMI can be canceled when the borrower has 80% equity in the home, the way they would have if 20% had been put down. However, PMI is not automatically canceled, and the buyer should be aware that they’ll need to write their lender a letter requesting cancellation. Can You Afford PMI? Lenders typically require that a borrower’s monthly debts not exceed 33% of monthly income. If the added cost of PMI pushes you over your monthly budget, you’ll need to shop for a less expensive home or postpone homebuying until your financial situation improves. Affordability is a fair objection to PMI, since it adds a monthly expense to a homebuyer’s budget. But as long as the borrower can afford it—and remembers to cancel it when they get to 80% equity—then PMI is a good tool to help more buyers become homeowners. |
AuthorA variety of pertinent real estate topics and tips from various authors and contributors. Archives
December 2024
Categorieshow much home can i afford?*
Click on the calculator to find out!*
|
Marybeth Rojas - Broker
1350 Old Bayshore Hwy. Suite 520
Burlingame, CA 94010
Telephone (650)796-5565
www.marybethrojas.com
www.avantproperties.us
DRE#01352623
1350 Old Bayshore Hwy. Suite 520
Burlingame, CA 94010
Telephone (650)796-5565
www.marybethrojas.com
www.avantproperties.us
DRE#01352623