With a fixer upper, you are presented with the opportunity to make the home more valuable. Many times, you will find this kind of home at approximately 8 percent below market value. You will be paying less in taxes as well because the taxes are calculated based on your home’s sale price. So, how do you even go about finding your ideal fixer upper? Read on below for more information.
The Perfect Choice
It is often said that the perfect fixer upper is one that everyone will want to own in the future, but no one wants it right now. The location is going to play a key role in your selection. Make sure the home is in a desirable location or an up and coming neighborhood.
The layout of the home should also flow and have a good configuration to start with; otherwise, you may find yourself spending even more money to move and take down walls.
Choosing a Mortgage
When you choose this kind of home, there are different mortgage loans to consider because of the condition of the home. Renovation loans, for example, allow you to finance the home while also making improvements at the same time.
The improvements you make can then be paid off over a longer time and typically at a lower interest rate than with other types of financing.
Another type of loan is a construction loan. It is a more short-term option and often comes with a higher interest rate, but it provides the owners with the funds they need to build and renovate the property.
Before you can consider this type of loan, however, you need to find a qualified builder, have your minimum 20 percent down payment, and have the value of the property in its current condition appraised.
Since more and more buyers are looking to purchase newer and updated homes, you will find little competition when it comes to the fixer uppers that are available. However, instead of competing with other buyers, you are often competing with builders and investors which can drive the price up.
When choosing a fixer upper, make sure you understand your needs and make sure the home is what you are looking for. Depending on the renovations that need to be done, it can be a time-consuming project.
Finally, keep in mind that the property taxes will go up following the renovations because of its new value. If you remember all this info and you know where to draw the line, and you can envision the home’s potential, then you are ready to start your journey towards finding the perfect fixer upper.
One of the first steps to take when you consider purchasing a home or investment property is to take a very close look at your credit score. Keeping your credit rating in good standing to ensure that you can purchase cars, homes, and other items that require financing. Sometimes that means you will have to do some credit repair.
Of course, it is not uncommon for persons to find themselves in a financial bind every once in a while. An unexpected health expense can leave them strapped for cash and unable to pay their bills. Getting fired or laid off can cause the same dilemma. Sometimes, things even get so bad that vehicles, homes, and other possessions become repossessed. These types of things affect one’s credit. If the number dips too low, the individual usually has a hard time getting a bank to finance them. When they do happen to get approved for a loan with bad credit, the down payment is typically high.
There are plenty of credit card companies out there that will give just about anybody a line of credit. However, if your stats are less than stellar, you should expect an extremely high-interest rate. Luckily, there is a solution for this dilemma though. So, curious individuals should read further to learn more about it from our Los Angeles real estate agency.
How Credit Repair Works
Our firm is ready, willing, and able to help you find that perfect piece of Los Angeles real estate. But, if you know that you have overdue past loan payments, repossessions, or other credit issues, you might want to consider having your credit repaired before trying to obtain a mortgage. The first step is to find a reputable debt consolidation company that specializes in credit repair. Once that is out of the way, the process can begin. Basically, a large loan is taken out to pay for smaller loans. The payment is usually affordable, and one must make every effort to pay it on time by the due date. As the older bills start to become removed from your record, and you are paying for the new loan, your credit score will slowly begin to improve.
Also, it is a good idea not to take actions that will affect your credit score during this time. For instance, don’t take out a payday loan and forget to pay for it. Then, in a matter of no time, you will have repaired credit and be able to buy that Los Angeles real estate that you long for.
What If My Credit Is Not Great But Ok?
There are quite a few things you can do to improve your credit:
- Correct any errors on the credit report.
- Become an authorized user on a family member or partner’s card, providing they have great credit.
- Raise your available credit. A super easy step that can help you boost your credit quickly and without any ‘hits’ on your score.
- Negotiate a better rate or payment with your debtors.
- Always make minimum payments on time.
- Reduce debt-to-income ratio.
- Have a good mix of debt.
Here’s a handy page full off information to help you get your credit score to a healthy range.
Making the decision to buy a home or investment property is a big step. Finding a good real estate broker and looking at the properties available to buy in LA is the first obvious step, but you also need to secure the financing that is needed to make the purchase. Most people will need to secure a mortgage loan in order to buy a home, and there are actually numerous types of mortgages available. Having your financing pre approved will also help you be extra competitive on this market.
Finding the right mortgage loan is important. There are several options available depending on what you qualify for and what your situation may be.
Here are the primary types of mortgages you’ll need to consider.
Fixed Or Variable Rates?
The first consideration is what type of loan rate you’ll be using. There are two main types – fixed or variable.
- Fixed – Fixed rate mortgages have interest rates that are set in stone from the signing of the contract. The interest rate will never change, which means that you can easily budget your loan throughout the future. These are best for those planning on being in a property for years to come.
- Variable – Variable interest rate loans have interest rates that can change. The initial year or two will have a rate much lower than average, but after a certain period the rates can quickly increase. Those initial lower rates make them perfect for anyone looking to invest in a property and resell it within a year or two.
How long your loan terms extend for is important as well. The most common types of terms are 15 year or 30 year, and choosing the right one for your needs will require you to consider your situation, your plans, and your budget.
Other Types Of Loans
Along with the points above, there are several specific types of loans that you may need to consider. These include:
- FHA – These loans are backed by the Federal Housing Administration and are designed for first time home buyers or those who may not otherwise qualify for a loan. They have easier qualification requirements and are a better fit for many. (FHA = 3.5% down)
- VA – Available only to veterans of the armed forces, these loans are easier to qualify for, have great interest rates and terms, and make it easier for veterans and their loved ones to buy a home. (VA = 0% down)
- USDA – These loans are designed for those in rural areas who want to buy a home and get great loan rates with easier qualification requirements. Properties must be located in rural areas in order to qualify, and while most of LA doesn’t’ fit into this definition it’s still worth looking into when buying a home.
And these are only a few examples of the options available. Consider your choices and find the loan that is best for you.
Whether you’re buying, selling, refinancing, or building your dream home, you have a lot riding on your loan officer. Since market conditions and mortgage programs change frequently, you need to make sure you’re dealing with a top professional who is able to give you quick and accurate financial advice. As an experienced loan officer Natalie Salins has the knowledge and expertise you will need to explore the many financing options available.
Natalie is our preferred mortgage specialist, consider browsing her website to check out the different loan programs she offers, use the available decision-making tools and calculators, and use the secure online application if you are ready to get started. Feel free to reach out to her with any questions on how to get started.