Home Mortgage: Is a Fixer Upper Home Such a Good Idea?

As its name implies, a fixer upper home has problems that need to be fixed to make it an attractive piece of real estate that’s comfortable to inhabit. A home can become a fixer upper for several reasons, such as storm damage, fire damage, and vandalism. But most fixer upper homes are simply older homes that haven’t been well-maintained -- much less tastefully upgraded -- over the course of many years.

Potential Versus Reality

Because the architecture of fixer upper homes is often majestic and baroque, featuring detailed millwork and spacious drawing rooms that could accommodate your company Christmas party, prospective homebuyers often dream big when they lay eyes on a fixer upper that has boatloads of potential.

The question is: Can making good on that potential be done cost effectively through the credit union home mortgage you receive and any additional funds you put toward the project? We help you answer this question by providing information on eight parts of fixer upper homes that frequently need to be fixed.

  1. Roof - Asphalt shingle roofing costs about $4,300-$5,500 dollars to cover roughly 1,300 square feet of roof. When you replace a roof on a fixer upper, the cost is determined primarily by roof space, roofing material, and labor. For conversation’s sake, let’s split the difference, and say you replace the roof with asphalt shingles for $4,900.
  1. Windows - Fixer upper homes often have wooden, worn windows that are an energy conservationist’s nightmare. Thankfully, replacing obsolete residential windows can often be done in a day, but the cost could run you as much as $450 per window, including materials and installation. Let’s assume you install 12 windows at $375 per window for a total of $4,500.  
  1. Floors - Many fixer upper homes have wooden floors that are heavily scuffed and gouged or covered up with carpet to hide these imperfections. If you want gleaming, hardwood floors, and you have to replace the existing floor, you could easily spend as much as $12 / square foot. Let’s say the house has 2,500 square feet, 2,000 of which is wood flooring. That equals out to $24,000.
  1. Kitchen -In terms of design elements that become obsolete, the kitchen is the room in a home that tends to age the fastest. Different styles in lighting, cabinetry, flooring, and counter space seem to change almost as quickly as seasonal fashion trends. Because the cost of rehabbing a kitchen depends on the price of replacing its many elements, it’s tough to come up with a ballpark figure for the project’s cost. However, if you want custom, solid wood cabinetry, ceramic flooring, beautiful stone countertops, and the best appliances, it’s a good idea to set aside at least $35,000 for a midsize kitchen.      
  1. Bath - Realtors often say that there are two rooms in a home that make it sell: the kitchen and the bathroom. In addition to bedrooms, these are the rooms people tend to visit the most frequently. So, reinventing the bathrooms in a fixer upper home is typically a top priority for homebuyers.

The only problem is that, as with redesigning a kitchen, there’s really no maximum amount you can spend, with the aesthetics of the room and the technology it contains being the biggest cost factors. However, on the low end, Homewyse estimates that remodeling a 43 square foot bathroom runs about $6,700. So, let’s add this cost to the total for fixing up the home.

  1. HVAC - We save one the most expensive fixes for last: installing a new HVAC system. In old homes that have central air, air ducts often need to be resealed to maintain air pressure, components in the air distribution unit need to be cleaned or replaced, and a thermostat that offers better climate control often needs to be installed.

Furthermore, these expenses are based on the assumption that a fixer upper has central air. If the home doesn’t have central air conditioning, and you live in a climate where you need it, FIXR estimates that most homeowners spend $7,200 on installing central air conditioning, with the price rising as high as $15,000 in some cases.   


Is a Fixer Upper Right for You?

Before you answer, let’s take another look at the costs you may need to pay to “fix up” the residence, making it an attractive piece of real estate that’s comfortable to inhabit.

  • Roof: $4,900
  • Windows: $4,500
  • Floors: $24,000
  • Kitchen: $35,000
  • Bath: $6,700
  • HVAC: $7,200

Perform a bit of addition, and you’re looking at an estimated fix up cost of $82,300. If you simply want to “flip” the home, and earn a larger sum than the home mortgage you used to buy it and fix it up, your success is measured in dollars and cents. If you sell in the right housing market at the right time of year, you could easily come out ahead. However, if you plan to make the home your permanent residence, there’s more than resale value and home mortgage cost to consider.

If you love living in a home and creating memories there, these things can be worth far more than money. However, you will need money to buy the home and fix it up. If you plan to use a home mortgage to purchase and rehab the home of your dreams, email us today, or call (800) 325-9905, to learn about our attractive loan options. Our loan specialists are here to help!

Posted By: AmericanEagleCU

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