Does a Fixer-Upper Make a Good First Home? It Depends…

Many first-time homebuyers consider purchasing a fixer-upper.  Sometimes that can be a great way to get into a better neighborhood than you can afford, or it can provide you with an investment to resell later.  However it’s not for everyone.  Our guide is a great tool for helping you decide if a fixer-upper is right for you, but be sure to also reach out to the experts at CPM Real Estate to learn how they can assist you every step of the way in the home buying process!

 First, finances.  Before you can realistically begin house hunting, you should understand the homebuying process.  Start by organizing your finances.  While that sounds simple at first glance, it involves more than checking your bank balance. 

 Credit history.  First, request a credit report and review what is displayed in your history.  NerdWallet explains many people are surprised by what they find.  Due to clerical errors there may be wrong information on your report.  If you made any mistakes or had hardships such as late payments or bankruptcies, it also may be reflected in your report.  Take time to resolve issues before applying for a loan. 

 Debt-to-income.  The other key player in your financial picture is your debt-to-income ratio.  As a rule of thumb, lenders look for a debt-to-income ratio of 28 percent or less.  Lowering your debt not only improves your debt-to-income ratio, it can improve your credit score, and so you may need to work on that before applying for a mortgage. 

 Budget.  Next you should evaluate your budget, because even if you get a great loan, a fixer-upper will require you to invest in, well, fixing it up.  Take a hard look at your annual income, how much you set aside for a down payment, and your monthly expenditures.  An online tool such as the home affordability calculator from Redfin can help you with your numbers.  Remember you need to budget for repairs along with your home-owning basics such as the mortgage payment and utilities.  You’ll want a good rate for your home, so you should also review the current average APR. 

 Pre-approval.  Once your finances are in order, you can apply with a lender for mortgage pre-approval.  There are several types of mortgage loans, and some require you to apply through specific organizations.  A conventional mortgage is what most people get, which normally requires a 20 percent down payment.  There are also other loans you might qualify for, depending on your circumstances.  The FHA offers a mortgage with as little as 3.5 percent down. The VA and USDA Rural House Loan offer loans with 0 percent down.

 House hunting and fixer-uppers.  With pre-approval, your lender sets a loan amount, and you can begin house hunting.  When looking at fixer-uppers, remember to budget for repairs.  You will also likely need to add more tools to your toolbox.  It’s worth your while to invest in quality tools, as they will hold up to hard work and make your job more efficient. 

 If you’re considering buying a fixer-upper, some experts suggest evaluating the factors that will help the home be worth your investment.  Aspects such as location, condition, and the home’s layout can weigh into your decision.  As Business Insider notes, oftentimes the repairs that bring down a home’s value are extensive, expensive and must be made before you can live in a home.  Repairs including electrical, plumbing or foundation mean hiring contractors, which might be time-consuming and financially consuming. 

 Stay or sell?  If you are buying a home to love and live in for a long time, you may decide a fixer-upper is the way to go.  It can mean getting into a better neighborhood or school district, and you may be able to make the big repairs upfront, move in and portion out the rest.  Cosmetics can wait, and if you’re lucky, cosmetics are all the home will need.  If you plan the purchase as an investment to resell, you should carefully evaluate how desirable the location is, whether you can DIY repairs to save money and receive a good return on your investment.

 Fixer-upper?  Depending on your situation, a fixer-upper may make a great first home.  Closely examine your finances and potential homes, and you might just decide on a diamond in the rough.  If it’s right for you, it can become the home of your dreams. 

 Are you ready to find the fixer-upper or turnkey home of your dreams? Contact the pros at CPM Real Estate!

excerpt provided by Ray Flynn DIYguys

Ray Flynn | DiyGuys.net

ray.flynn@diyguys.net

Links

Need to Rent/Buy ? Relocating ?

For all of your Real Estate

Needs 

Palmas del Mar, PR -
The Caribbean Side

There is something for

everyone

Short or long Term Rentals

Available
Property Management, Cons-

truction,Houskeeping and

Remodeling...

Real Estate is our passion,
service is our mission.

Emergency Numbers:

Palmas del Mar -
Access Control 
787 285 2747
Fire Dept.
787 285 0102
Police Dept
787 852 2020

Palmas del Mar PDMU 
Water Company -
787 285 0202 

AAA - Water Company
787 620 7805
Palmas del Mar -
HomeOwners Office -
787 285 6425
PR Electrico Power
Authority  (AEE)
787 521 3434
Liberty Cable Service -
787 355 3535
PR Telephone Co.
787 775 0000
State Medical
Emergency
787 852 4044
Humacao Municipal
Emergency Service -
787 852 0460
Ryder Hosptial -
787 852 0768

*CPM The disclaimer asserts that the
company
CPM Realty & Realtors  will not be held
responsible for any inaccuracies 
in the referral of any of our suppliers or
representative.