The vast majority of Chicago home buyers prefer a move-in ready, fully updated home. Turn the key, walk in and unpack your stuff! The problem with holding out for an Instagram-worthy home, is the fact they cost a lot more than properties with interiors from That 70’s Show.
When you buy a freshly-renovated home, the seller is reaping the benefit of all those shiny upgrades when they collect their sales check. Meanwhile, you’ve likely paid top dollar, and you won’t have quick ways to build equity.
Of course, there’s a difference between a home that needs updating, and a money pit that will empty your bank account. This is why we take the home inspection process so seriously, and call in contractors when we need expert advice and estimates. If you have the proper contingencies in your purchase offer, you can get professional input on the home condition, and exit the deal if show-stoppers are found.
You can finance home repairs and upgrades right in your mortgage, if you use an FHA 203(k) mortgage. There are two versions: the “Limited” version gives you up to $35,000 to use for repairs, above and beyond the mortgage for the purchase itself. The “Standard” 203(k) allows a higher overall loan limit to cover bigger renovations. Both you and the property must qualify. You’ll need a savvy lender who is experienced with these under-used (but highly beneficial) mortgages. You can get them with as little as 3.5% down, and the credit requirements are reasonable.
The best part about buying a fixer-upper is that you have the opportunity to improve the home according to your tastes and needs. Any improvement in market value that occurs as a result of those upgrades belongs to you!
When you buy a home that someone else has renovated, the materials and workmanship are only as good as what the seller was willing to pay for. Unless you see receipts, work orders and building permits, it’s hard to say what you’re really getting for the money.
Fixer-uppers aren’t for everyone. But if buying a home that needs a little work puts home ownership in closer reach, you owe it to yourself to consider them.
StartingPoint Realty – helping first-time home buyers since 2004!
StartingPoint Realty proudly serves first-time home buyers throughout Chicago and the Northwest suburbs. Get an introduction to home buying by attending our free home buying seminar! There’s no sales pressure and no obligation. Space is limited, so please register your choice of location and date to reserve your seat!
Always feel welcome to contact us for help with your Chicago home buying questions!
Ryan Gable Broker/CEO Starting Point Realty
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