Tips for Baltimore Home Buyers - Financing a Fixer Upper
For those who are buying a house in Baltimore and are thinking about buying a fixer upper, it is important to consider the amount of work that will need to be done and your budget to do so. Additionally, you will need to look into obtaining the necessary Baltimore mortgage to finance such a purchase. Before just investing, consider a few factors that could play a role in the purchase process.
Obtaining Insurance for a fixer upper
Even before considering the actual costs associated with the repairs of a fixer upper, consider how you will obtain housing insurance. Homeowner's insurance is a requirement from virtually any lender. Having insurance helps to reduce the risk of problems that can negatively impact the value of the home such as a fire or theft. Obtaining insurance, however, is difficult for some homes that have significant structural or design flaws. If the home has potentially dangerous conditions that could result in an electrical fire, for example, obtaining insurance can be difficult to do. Because most lenders will require home owners insurance on the property, you want to talk with your agent in advance to make sure you do not run into any issues when trying to obtain financing for the home.
Financing your fixer upper
In addition to working out the options with your insurance agent, you will need to locate a Baltimore mortgage lender to finance homes purchase. Not just any mortgage will do. You may likely need one that will provide you with funding that can cover the repairs necessary. Additionally, the home buyer may need to consider the value of the home. Lenders often will not provide a Baltimore mortgage over the value of the home. For these reasons, you often need a specialized mortgage. The good news is that there are options.
When buying a house in Baltimore, consider these financing options for the fixer upper.
- FHA HomeStyle Renovation Mortgage - This type of mortgage combines the cost of the home's purchase along with the home improvement financing you need. This lumps these two debts together, reducing closing costs and making qualification easier. You can purchase a home and obtain a mortgage with up to 50 percent of the as-completed value of the property.
- 203k Rehabilitation Mortgage Insurance - This type of loan allows the homeowner to finance up to $35,000 into their mortgage for improvements to the home. These funds are easily available for a fixer upper as long as it is a single family home.
Talk directly to your lender about other Baltimore mortgages that may work for your specific needs. Often times, when buying a house in Baltimore that needs these types of repairs, you will need to discuss the financing options you qualify to obtain. Keep in mind that every home is different and it may be up to the lender to make the ultimate decision about whether or not to lend to you.
When buying a house in Baltimore that qualifies as a fixer upper, don't assume you need to have all cash in hand. You can obtain a Baltimore mortgage that covers the costs properly. However, you will need to invest wisely and, before buying the home, you need to accurately determine the value of the home. Doing so reduces your risks of losing money and increases the chances you'll have the funds necessary to create your dream home.