In Home Loans, Renovation, Tips & Advice

Fixer upper vs move in ready.

For the most part, flipping houses on home improvement reality TV shows looks like a piece of cake. You know how the storyline goes: a couple buys a fixer-upper that needs a lot of work, they begin renovating it, they discover a problem and end up needing more money than they planned, yet miraculously, everything somehow works out in the end. There’s usually footage showing the dramatic difference between what the fixer-upper looked like before being renovated and after, and it can be inspiring enough to make you say, “Hey, I want to do something like that.”

That’s the magic of good TV production and editing. In real life, fixer-uppers can be a lot of work compared to houses that are already move-in ready. Whether or not you buy a house that needs a lot of repairs depends on many different factors. Here’s a list of pros and cons of fixer-uppers and move-in ready houses.

Pros of Fixer-Upper Homes

Lower Sales Prices
You can find a great deal on a fixer-upper. If you come across one that’s in a pricey neighborhood and you’re willing to put in what it takes to restore it, you could end up paying just a fraction of what your soon-to-be new neighbors did for their homes.

Less Competition
In some hot real estate markets, sellers of move-in ready houses are getting multiple offers from different buyers trying to outbid one another. But there’s generally less competition for fixer-uppers than for move-in ready houses. In turn, that can give you more negotiating leverage with sellers.

Personalization
Buyers have more creative control over fixer-uppers than move-in ready homes. With a fixer-upper, you can customize a house’s layout and details of each room. If you’re a hands-on type of person who enjoys taking on home improvement projects, when the house is finished, you may take pride in knowing that you did a lot of the work.

Cons of Fixer-Upper Homes

Time-Consuming
If you’re planning on doing most of the work yourself, remodeling can take a lot of time, so it’s important to have patience and have somewhere else to live in the meantime. Even if you hire a contractor to do the work, it’s still going to take a longer amount of time for a fixer-upper to be move-in ready compared to buying a house that’s already in move-in ready condition.

Hidden Costs
While sales prices for fixer-uppers may be lower than move-in ready houses, at times the cost to repair a fixer-upper may not be worth it. This is especially true if you run into any hidden issues, like structural damage or mold, which could wreak havoc on the budget you’d already set for repairs.

Pros of Move-In Ready Homes

Less Work
Buying a move-in ready house requires much less work than a fixer-upper, so it may be a better choice if you’re on a tight deadline to move into a house or you’re not exactly a DIY kind of person.

Often More Up-to-Date
In today’s competitive market, move-in ready houses are more likely to come with modern features and trends, like open floor plans, updated appliances and eco-friendly options. Transforming a fixer-upper to have these same features, on the other hand, could take a lot of work (and money).

Rarely Surprises
There’s always a slight risk of running into hidden problems when you buy a home, like structural issues, mold or critter infestations. But with a newer, move-in ready house, you’re much less likely to encounter these.

Cons of Move-In Ready Homes

Less Creative Control
There’s not much room for customization with move-in ready homes, other than choosing décor. If you’re not thrilled with the design or layout of a house you’re considering, you’ll have to pay more to have changes made or accept the house as is.

Cost
Sales prices of move-in ready homes don’t exactly rival the sales prices of fixer-uppers. There’s no way around it: you’re going to be paying more for a move-in ready house.

Types of Renovation Loans

Not sure what type of renovation loan is best for the project you have in mind? Good news! With PrimeLending you have options.

Conventional

Type Best for Advantages
HomeStyle®
  • Older homes in established neighborhoods
  • Appraiser-required or borrower requested repairs that add value to the home
  • Fewer costs by rolling repairs purchase/refinancing expenses into a single loan
EZ “C”onventional
  • Covers appraiser-required or borrower requested repairs
  • Finance small upgrades on a newly purchased home over a short period of time
  • Cosmetic, non-structural improvements
  • Creates dedicated account to cover costs of updates
  • Fewer costs by rolling updates and purchase/refinancing expenses into a single loan
Buyer/Seller Funded Repair Escrow
  • Borrower-requested repairs or other home updates that will determine final appraisal
  • Creates dedicated account to cover costs of updates
  • Funds can be provided by the buyer or seller
  • Fewer costs by rolling construction and purchase/refinancing expenses into a single loan
Jumbo Renovation
  • Covers appraiser-required or borrower requested repairs on high-priced luxury homes that are valued over $484,350
  • Can be used for refinancing or home purchase
  • Covers a dedicated account to cover non-structural repairs up to $250,000
  • Fewer costs by rolling repair and purchase/refinancing expenses into a single loan
Pool Escrow
  • Adding a pool
  • Creates dedicated account to cover cost of pool construction
  • Fewer costs by rolling construction and purchase/refinancing expenses into a single loan
Weather-Related Escrow
  • Repairing weather damage
  • Making weather-realted or energy efficient upgrades
  • Creates dedicated account to cover cost of repairs or upgrades
  • Fewer costs by rolling construction and purchase/refinancing expenses into a single loan

 

Government-insured

Type Best for Advantages
FHA 203k Full/Standard
  • Refinancing or buying older properties
  • Refinancing or buying a home requiring structural repairs or major renovation
  • Low down payment requirement on new home purchase
  • Low refinancing interest rates
  • Fewer costs by rolling repair and purchase/refinancing expenses into a single loan
FHA 203k Streamline
  • Refinancing or buying a home that needs updating or repairs
  • Cosmetic repairs, remodeling up to $35,000
  • Low down payment on new home purchase
  • Low refinancing interest rates
  • Less paperwork
  • Fewer costs by rolling repair and purchase/refinancing expenses into a single loan
HUD REO with Repair Escrow
  • Purchasing a foreclosure home
  • Foreclosed properties requiring minor repairs up to $5,000
  • Creates dedicated account to cover appraiser-required repairs
  • Fewer costs by rolling repair and purchase/refinancing expenses into a single loan
USDA Repair Escrow
  • Refinancing or buying USDA property that needs updating or repairs.
  • 100% financing for refinancing or home purchase in a USDA rural area
  • Creates dedicated account to cover repairs
  • Fewer costs by rolling repair and purchase/refinancing expenses into a single loan

Get Started Today

Whether you want to buy a fixer-upper or a move-in ready house, you have options with PrimeLending. We offer a wide variety of loan products for different budgets and financial goals. Learn more about your options using the PrimeLending Renovation Guide.

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