If you’re in the market to purchase a home in Billings and planning on waiting until the spring buying season is underway, you’re in for a big surprise. All signs are pointing to an early start this year so if you wait too long to jump in, you’ll be faced with far more competition than you might have imagined.
If you don’t particularly relish the thought of bidding wars and losing out on home after home, consider looking at fixers. There are definite advantages to buying a home that needs work and, because the thought scares so many buyers, you’ll have far less competition.
And, the bonus is that there is a terrific loan program that wraps the cost of the repair and rehab work right into the mortgage, so you’ll only have one payment. Not only will you end up with a house to fit your tastes, but you’ll build instant equity.
There are other advantages to buying fixers
It’s hard to look at a rundown beater of a home and imagine the possibilities. When you’re set on purchasing one, it’s a good idea to take a contractor with you so you can look at the home through his or her eyes.
The biggest advantage to buying a fixer upper in Billings is the home’s eventual resale value. Close behind is the perk of buying into a better neighborhood than you can otherwise afford. Finally, since fixers, by their very nature, require repairs, they’re not only priced to reflect that, but sellers are sometimes more amenable to negotiating on price. Not always, but we do see it happen occasionally.
How to pay for it
The U.S. Department of Housing and Urban Development’s FHA offers the 203(k) program to help Americans purchase homes in need of work. The program guarantees a loan for both the rehab work and the purchase.
It’s a complicated program and not one to be undertaken without knowing the ins and outs of it so if you’re interested, ask your lender. What we do know is that you are not required to make a house payment until you move into the home, so you won’t have to worry about paying for two homes while the new one gets refurbished.
Only certain homes qualify for the FHA 203(k) loan. First, it must be at least one-year old. If you’re purchasing a condo, all work must be done to the interior only. If you must demolish the home, you must keep the existing foundation. Finally, the home’s final value must be with the FHA mortgage limit for Yellowstone County (in 2017, that limit is $275,665 for a single-family home).
As we said, it’s a bit complicated but your loan agent can help clarify it for you.
Borrower qualifications are the same as those for the standard FHA-backed mortgage. You must be able to prove that you are employed and have been consistently, be a lawful resident of the United States with a social security number and you must intend on living in the home.
Your loan payment must not exceed 30 percent of your gross monthly income, your debts every month must not exceed 43 percent of your gross income, no bankruptcies on record for the past two years (no foreclosures for the past three) and your credit score must be at least 580.