4 Ways to Make a Less Than Perfect Home Work for You

If you are in the process of trying to purchase a new home, you may have noticed that there isn’t much out there to choose from. Although a decrease in inventory this time of year isn’t unusual, it does seem lower than in years past. Don’t get discouraged though! There may be a house available that while not in pristine condition, checks other boxes on your list like location, school, number of bedrooms, etc. If you can look past the bright orange carpet and dated fixtures, there are ways you can make an offer without breaking your budget and still have money left over for improvements. Here are some suggestions to aid in this effort.

Consider lowering your down payment and using the excess cash for improvements. If you are able to pay a 20% down payment, consider putting down 5% instead. While you will have to pay PMI (private mortgage insurance) for the short-term, if the home appreciates in value enough to be at the 80% threshold, you can obtain an appraisal and drop the PMI.

If you see that a listing is using terms like “fixer-upper” or “cash offers or conventional loans only,” this could be a red flag that the property is in poor condition and might not be sellable to the secondary market. Let your lender know what kind of issues the property has to determine if the property can be used as collateral. For example – dated or ugly flooring, cabinets, and appliances wouldn’t make the property unacceptable, but a hole in the roof, structural damage in the foundation, or mold would.

Be open to alternative financing options such as a bank’s portfolio loan. These are not sold to the secondary market and don’t have to conform to the same standards. When improvements are done, you could refinance into a secondary market loan. If you plan to sell your current home, you could also do a bridge loan which allows you to use the equity from your old home for improvements or for the down payment on the new one.

Educate yourself on the cost of the improvements you would like made. Make a list and do some price and inventory shopping. This allows you to have a budget going into a remodel and you will know approximately how much you will need to make the home you purchase meet your standards.

In this market, getting a bargain doesn’t happen too often. However, by lowering your standards a bit, you may find yourself in a position to better negotiate. This, alongside some work, may just help you get the home of your dreams.

Mary Ann De Arvil

Mortgage Lender

NMLS No. 619821

If you have additional questions or concerns about the mortgage process, our mortgage lenders would be happy to share their expertise to put you on the path to homeownership.

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Opinions expressed are solely my own and do not express the views or opinions of Stillman Bank.