Many homebuyers are sick of browsing limited listings. If you’re having trouble finding the right house, you too might be looking for alternative solutions. The good news is that broadening your search to include homes in need of repair could present you with a wealth of new options.
Why fix up a fixer-upper? There are a few advantages to consider:
If you’re a homebuyer: Going this route and renovating a fixer-upper, which may include a short sale, foreclosure, or distressed property, could make it possible to achieve your dream of homeownership. This is especially true if you have your heart set on an area with limited listings.
If you’re a seller: The benefits are two-fold. Right now, nearly 60 percent of homebuyers are willing to buy a fixer-upper. As a seller, you may not need to complete every repair before listing. You could also move up to a larger home using an all-in-one Renovation Loan if you’re having a hard time finding suitable listings.
Take back control in today’s market.
Contact your local Academy Loan Officer to learn about rolling the cost of renovation into your mortgage.
Here are some all-in-one Reno Loans that can make this possible:
FHA 203(k) Standard and Limited.
- The FHA 203(k)—also called an FHA Construction Loan—is an all-in-one Reno Loan that can be used to buy and fix up a house: all with one application, one closing, and one monthly payment.
- The FHA 203(k) Standard has no maximum repair limit, while the FHA 203(k) Limited has a $35,000 renovation maximum.
- Like an FHA Loan, the FHA 203(k) also has a 3.5 percent minimum down payment requirement.
- An approved 203(k) consultant may be required to plan renovations on the Standard Loan, typically exceeding $35,000.
FNMA HomeStyle® Renovation Loan.
- The FNMA HomeStyle® is also an all-in-one Renovation Loan with one application, closing, and monthly payment.
- It can be used to purchase a fixer-upper and receive the funds needed to remodel the home.
- It provides a convenient way for buyers to make repairs totaling up to 50 percent of the future as-completed value of the property, rather than taking out a HELOC or second mortgage.
- This loan has a 3 percent down payment minimum and may be more cost-effective than using an FHA 203(k).
Eligible improvements range from small to large and might include kitchen/bathroom remodels, replacing flooring, adding a room, upgrading appliances, repairing roofing, and landscaping, among others. All-in-one Renovation Loans are available to homebuyers of all income levels on almost any type of property.
While it’s imperative to know what you’re getting into and plan your project in advance, purchasing a fixer-upper can give you the chance to customize and improve the value of an outdated house. You’ll have full control over what improvements are made, essentially creating your dream home.
Talking with a mortgage professional can help you better understand what goes into rolling renovation costs into your mortgage.