1) Save $100’s of Thousands on Purchase Price (see below examples source data: themls)
2) Increase Equity (value) Faster. The above renovations took place over a 6 to 12 month period and averaged an 32.67% Increase in value. Compare this to the “Historical Average Stock Market Return” is 10% according to S&P 500 as reported by NerdWallet
3) Get a Home in a Neighborhood/City that may otherwise be out of reach.
4) Use increased equity for further updates with specialized financing;
Renovation loans are mortgages that let you finance a house and improvements at the same time. With a renovation loan, you can pay off improvements over a longer period of time and at a lower interest rate than other types of financing. Options include:
FHA 203(k): Offered through the Federal Housing Administration, FHA 203(k) loans allow lower income and credit scores than conventional mortgages. They can be used for most improvement projects.
VA renovation loan: The Department of Veterans Affairs recently updated its VA loan guidelines to include the purchase and renovation of a home. A VA-approved contractor is required, eligible projects are somewhat limited and your lender may charge a construction fee.
HomeStyle: Guaranteed by Fannie Mae, HomeStyle mortgages require higher credit scores than FHA 203(k) loans. But almost any improvements are eligible, including “luxuries” like a pool or landscaping.
CHOICERenovation loan: Guaranteed by Freddie Mac, this mortgage allows improvements that help homes withstand natural disasters, among other upgrades. And borrowers can make repairs themselves, prior to closing, to earn a down payment credit.
A fixer-upper mortgage may also help cover your mortgage payments if you have to live elsewhere while improvements are in progress, and may include extra funds in case projects exceed the estimated cost.
5) You get a home EXACTLY as you want style, finishes, features. Be it Modern, Traditional, Classic or Transitional. You get to choose.