If you are in the business of buying a fixer-upper house and renovating it, you’ll likely need to acquire the finances to do so. There are a few tips you can follow to make the process easier.
Get A Home Inspection
The first step in taking on a fixer-upper is to get a home inspection. This should be used to determine if the house needs new plumbing, roofing, or windows. It should also be used to determine if new kitchen or bathroom fixtures will be needed.
Remodeling and repairing are both expensive tasks to complete. It is best to get estimates from a few professionals before moving forward with the project. If you are taking a renovation loan, the lender might dictate which contractors they will pay for. You will likely get a list of possible candidates and have to choose your contractors from that list.
Renovation Project Funding Options
You have a few options when it comes to how you will finance your renovation project. They include a loan from Fannie Mae, an FHA, and Home Equity Loans/lines of credit. Fannie May gives you flexibility with your loan. Essentially, you are taking on a mortgage just to cover the costs. This loan can be used to either fix up a house you or someone else is living in, or for an investment property. You can get this loan with as little as a 3% down payment.
An FHA loan is one offered by the Federal Government. This is the loan to get if you want the flexibility of being able to work with any contractor you choose. You can also get an FHA loan if you will be the one performing the renovation work.
A Home Equity line of credit is harder to get. In order to qualify, the house you are renovating has a minimum of 20% equity. This loan is provided to you by use of a credit card, whereas a Home Equity loan is a second mortgage. Your loan will be no bigger than 85% of the total amount the house is worth.
For more information on how to pay for the renovation of a fixer-upper, please contact Rushview Commercial Funding.