Should You Buy A Fixer-Upper? How To Tell If It’s Right For You

Buying a home that needs significant renovation sounds like a nightmare to some –and a dream come true to others. With renovation reality TV, America has romanticized the idea of buying a fixer…

Buying a home that needs significant renovation sounds like a nightmare to some –and a dream come true to others. With renovation reality TV, America has romanticized the idea of buying a fixer-upper and making over their home. But as satisfying as it sounds, remodeling shouldn’t be taken so lightly. After all –they don’t call it “sweat equity” for nothing!

There are some questions you should ask yourself and discussions you should have with your spouse before taking on a project home.

Is a fixer-upper really for you? Let’s get the conversations started!

What is it about a home renovation that makes it appealing?

Buying a home to flip because it looks like a fun project on “reality TV” is a big mistake. It takes a large crew, a big budget, and a whole lot of TV magic to make it look like a 30-minute walk in the park.

However, if you’re attracted to the possibility of making a profit, that may work! Having a solid plan, a budget, and wiggle room for surprises, buying a fixer-up for profit is reasonable. A study by ATTOM Data Solutions showed that home-flips in 2018 make an average of $65,000. Not bad!

The most popular reason for purchasing a home that needs renovation is to be able to design your dream home without having to build one from scratch. While costs can add up for significant home makeovers, generally speaking, it’s still more cost-effective than building one from the bottom up. If the home is vintage or is historical, then renovating it is the only way to have your dream home.

Where will you live during renovations?

Depending on how extensive the remodeling is, you may need to find temporary housing while the work is getting completed. Not only can this be an inconvenience, but it can be costly as well. Even rooming with another family for a week or two has its costs. If it turns out that you need to live in a hotel, you may need to factor in the cost of eating out, laundry, and extra storage for your furniture.

Renting instead? Plan on several months of double the utility bills and mortgage/rent payments in addition to your regular financial commitments and cost of renovation. This brings us to the next question…

What’s your budget?

The least expensive “fixer-uppers” are the ones that need cosmetic upgrades. Retiling the bathroom’s walls, refinishing the wooden floors, repairing the siding, or removing old wallpaper are all inexpensive relatively speaking. But still, even then, costs can creep up.

‘For more extensive renovations that require a contractor, get several quotes, and always plan for more. Rare is the renovation that goes as planned or stays in budget.

How will you finance the renovation?

After you’ve gotten several quotes, figured in the cost of supplies, the cost of living, and have added a bit more, it’s time to explore financing. Unless you’ve been planning several years for this remodel, chances are that you don’t have a mountain of cash from which to support your dream remodel.

The good news is that you can make it all possible with a home loan. Here are two of the most popular options:

An FHA 203(k) loan lets you put as little as 3.5% down, and you can pay it back in 15 or 30 years, similar to a traditional FHA loan. There are a few limitations to this loan, however. For example, “luxury” upgrades such as a swimming pool or adding a patio are not allowed. Also, all the work needs to be completed within six months.

The other popular loan is a Fannie Mae HomeStyle loan. It’s similar to a 203(k) loan, but it requires a little more down. There are fewer limitations to this loan. As long as the renovation is permanently attached to the home and it adds value, you’ll be able to finance it with this home loan.

There are more details and many more ways to finance your home remodel, please contact us! Whether you’re a homeowner or are shopping for a fixer-upper, there’s a loan for you. Contact us today to get matched with the home loan that can make your renovation dream come true, at a rate you can afford.

10 Reasons a VA Loan is Right for Your Next Home Purchase

If you are a former or active duty service member looking for a low-stress, low-cost mortgage when buying a home or refinancing, Blake Mortgage, is happy to walk you through the VA loan…

If you are a former or active duty service member looking for a low-stress, low-cost mortgage when buying a home or refinancing, Blake Mortgage, is happy to walk you through the VA loan process to get you the best rate and deal. Contact Blake Mortgage today to learn more about this incredible home loan benefit.

At Blake Mortgage we are thrilled when we can help military families and veterans qualify for a VA loan because of the many advantages this loan program offers over other mortgage options. It’s our honor to assist those who have bravely served our country save money on their home mortgage.

Here are the top 10 reasons to consider a VA loan for your home purchase, plus 2 refinancing benefits:

  • No Down Payment Required

Unlike other borrowing options, in most cases, a VA loan does not require a down payment. Therefore, you can free up your cash to use for other items or move in without saving for a down payment which can be an obstacle for homeownership for many people. 

  • Lower Interest Rates 

VA loans offer consistently lower rates than traditional bank financing loans because the VA home loan program is federally backed by the U.S. Department of Veteran Affairs (VA). 

  • Easy to Qualify 

The good news is to qualify for a VA loan credit and income requirements are much more lenient than conventional loans. You also don’t have to be a first-time buyer to qualify.  

  • No PMI Payments  

Private mortgage insurance, or PMI as it’s commonly known, is required for most types of loans when the buyer does not have 20% down. The PMI protects the lender should one not be able to make a payment on their loan. So not only do you not need a down payment for a loan, you do not need coverage for not having 20% down. Avoiding PMI is a great benefit it can save you anywhere from .5 to 2% of your original loan amount a year. 

  • Federally Guaranteed 

Because the VA guarantees the loan,  lenders are willing to offer more favorable terms than a conventional home loan.

  • Communities are Vetted

The Veteran Affairs Department will even go as far as vetting communities before a buyer moves in so that the community is suitable for servicemen and women with disabilities.

  • Reduced Closing Costs 

A VA loan may also have reduced or no closing costs.

  • No Prepayment Penalties 

Should you choose to make extra payments to reduce your principal balance or pay off your loan early, you will not pay any extra fees or pay a prepayment penalty.

  • Default Protection 

The VA provides insurance to lenders in the case that you cannot make a payment on a loan. Additionally, there are services that may be offered to veterans in danger of defaulting on their loans.

  • Available Across the United States 

No matter where you live in the U.S., you can access a VA loan by contacting a VA-approved lender. 

VA Loans are not just for new homes but can also save money when refinancing. 

  • Interest Rate Reduction Refinance Loan 

An interest rate reduction refinance loan (IRRRL) is an excellent tool for veterans to refinance to lower their monthly mortgage payment with a reduced interest rate. Blake Mortgage can investigate whether we can get you a rate lower than the one you currently have. What is great, is you may not need an appraisal nor credit underwriting to apply for an IRRRL. It’s also possible to refinance without having to bring any money out of pocket to closing. 

  • Cash-Out Refinance Loan 

Need cash from your house? While it’s not possible to get money out from an IRRRL, a VA-backed cash-out refinance loan allows you to take cash out of your home equity. Additionally, it gives you the flexibility to refinance a non-VA loan into a VA-backed loan.

Who is Eligible?

Let us at Blake Mortgage help determine your VA loan eligibility. Or you can get your VA Certificate of Eligibility (COE) here. 

VA home loans are generally available to those who have their Form DD214 and have:

Served more than 180 days during peacetime  OR

Served 90 consecutive days of active service days during wartime   OR

Are active members of the National Guard for at least 6 years OR

Have served in the Gulf War for 24 months

Are surviving spouses of servicemen either killed or missing in action or due to a service-connected disability 

Get Started Now 

Blake Mortgage offers VA backed  loans through various lenders  and can walk you through the process. To see what a monthly payment looks like or to apply for a VA loan, schedule your free one-hour consultation with Harry Panosian, Certified Mortgage Consultant and Certified Financial Planner.

 About Blake Mortgage

Blake Mortgage is a residential and commercial mortgage firm based in Scottsdale, Arizona, that has served the Phoenix Metropolitan market since 2002. We offer comprehensive yet customized mortgage solutions to our clients. Our strength lies in our detailed, personalized, and client-focused approach. Blake Mortgage embraces the core values set forth by the company’s founder, Harry Blake Panosian, and approaches every client and transaction with high standards of professionalism, loyalty, and integrity. We work diligently with our clients and value constant communication with the client as well as their realtor. Blake Mortgage abides by the code of ethics of the National Association of Mortgage Brokers and is transparent in all of its operations.

Photo Credit: Frank McKenna/ blog.frankiefoto.com