If you’ve been feeling like trying your hand at being handy, you may be in the market for a fixer-upper house. But buyer beware, not all fixer-uppers qualify for traditional financing.
What do you do when you find yourself with a non-qualifying fixer-upper and without a pot of gold? We asked Doug Carling, a mortgage lender with more than 15 years of experience, for some insight into fixer-upper loans and how to find the right one for you. And here’s what we got:
Also known as rehabilitation (or ‘rehab’ for short) loans, fixer-upper loans are a special type of funding that’s used specifically for renovations and upgrades to a home.
There’ are several types of fixer-upper loans. Qualifying for them depends on a few factors, including the scale of the renovation you’re planning. Don’t worry, we’ll talk more about that in just a bit, so hold tight.
The short answer is no. Typical mortgages don’t cover remodeling. Plus, if your fixer-upper is in poor enough condition, it won’t even qualify for a traditional fixed-rate loan. That’s why you need a loan specifically designed for upgrading a home. Let’s talk about a few options out there for you.
Basically there are four different options for you when it comes to rehab loans. The one that works best for you will depend on the projects you’re facing and how much money you want to donate to the cause.
But if words aren’t your thing, here’s a chart. Enjoy!
Now you may be wondering how to choose between all of these options. Don’t worry, you may not have to. Often the decision will be made for you once you know exactly what your remodel looks like.
Getting your hands on a loan like this shouldn’t be too difficult. It’s all just gonna depend on credit scores, loan amount needed and what kind of money you can spare to put down–piece of cake.
Before you commit to any loan, Doug recommends fully knowing and understanding your budget.
“Be cautious of your expenses so you don’t do a cost overrun,” said Doug. “It’s easy for buyers to not realize how much work they’re doing. The shinier it is, the more expensive, so it’s important to be cognizant of budgeting.”
And there you have it, your fixer-upper loan questions answered. Now, while we may not have answered all of your questions, we hope to have at least helped you understand your options. Onward you go!
https://pocketsense.com/203k-vs-conventional-rehab-mortgage-7305659.html© 2019, Consumer Agent Portal, LLC. All rights reserved.