Home > Mortgages > Should You Buy a Fixer-Upper?

Comments 0 Comments

When you are in the market for a new home, finding the right property while staying in your budget can be a challenge. You may have to make some compromises on your desires to make the process more affordable. An option for homebuyers on the hunt for a bargain may be an older home that needs some work. Getting your home on the cheap can be great, but be sure you know what you are getting into before you sign on the dotted line. Check out some factors to consider if you are buying and renovating a fixer-upper.

Put in the Research

The first step is looking for red flags with the property you are considering purchasing. It’s a good idea to hire a home inspector to give the place a thorough evaluation — this should cost around $200 to $300, but has the potential to save you thousands.

If you choose to move forward, scope out the neighborhood before you begin any work. Attend a few real estate open houses if possible to examine the home interiors, and plan to keep the house within the realm of the neighbors’ styles for resale purposes. If you are flipping the house for short-term living or to make a profit, be sure you estimate how the home will appreciate so you know the work and investment is worthwhile.

Unless you are skilled in wiring, plumbing, installing heat or conditioning systems, and cutting through walls, it’s a good idea to leave this work to the professionals. Before you buy the home you may want to get some estimates so you’ll know about how much it will cost to fix up. If you are using a contractor or dealer, take the time to choose one with a good reputation. You can talk to people who have used him or her in the past, consult with the Better Business Bureau and even check websites like Yelp.

Put in the Work

If you do decide to do the work or fund the materials yourself, it’s important to use products that look good, are easy to maintain and last a long time — these are not always the most expensive. Give the most important rooms the most attention first — like the kitchen and bathroom.

Electrical and mechanical work can take a while and make a big difference, so be sure to get started on these tasks early if you have a set date you need to move into the home.

Finally, making a house your home is in the little things. These are often inexpensive additions that can make a big difference when it comes to being happy with your choice. This includes small touches like new doorknobs, ceiling fans, lighting or even landscape details.

Fund the Fixing-Up

Buying an old home has its charms but when buying one, it’s a good idea to think of the total purchase price as what you will pay to make the house livable and/or how you want it. This means the amount you pay to purchase the house is only part of the cost.

It’s a good idea to think about that as you decide how much money you will use as your down payment. To finance the renovations, you will need to have some money leftover. If you lack the funds for even immediate repairs, you should weigh the cost of borrowing against the cost of delaying the work. If you have to borrow money for the improvements, it’s important to be cautious when using credit cards due to interest rates. (Here’s how you may be able to lower yours.) Also, funding a large renovation on your credit cards can do major credit score damage. If you want to see how maxing out your credit cards affects your credit scores, you can check two of your scores for free every month on Credit.com.

Whether it is physical, financial, or time-consuming, fixer-uppers can cost more than you may think. Before you make the decision to take on a housing project, make sure you know what you are getting into — be ready to make a new type of budget and possibly even get your hands dirty!

More on Mortgages and Homebuying:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team