If you’re looking to purchase a home in the Chicago area, your primary two options are a more expensive, move-in-ready home or a more affordable fixer-upper. Both are good options for different circumstances and in order to know which is the best for you, there are several questions you need to ask yourself.
How Long Do I Plan to Stay in My Next Home?
If you plan to stay in your home for fewer than five years, you may not want to invest your time and energy into the property. As a general rule of thumb, move-in-ready homes are a better option for people who don’t intend to settle in the area simply because you can move in and out rather quickly.
If you do see yourself staying in your next home for five years or longer, you may want to consider a fixer-upper-style property that you can remodel according to your needs and tastes. One of the drawbacks of purchasing a newly-remodeled home is that you’re moving into someone else’s vision, whereas if you purchase a fixer-upper, you have much more of a blank slate to create a home that’s truly yours.
Of course, if you do choose to remodel, you will want to make sure that your remodeling projects align with market best practices so that you’ll add to the home in a way that attracts other buyers should you decide to resell in the future. But even with general guidelines in place, you’ll still have plenty of room to infuse your own ideas, personality, and style into the home.
How Does Your Desired Location Influence Your Decision?
Another practical determining factor is location. While most neighborhoods have a mix of newer and older homes, there are certain locations that come primarily with new homes or historic homes. Location is one of the top determining factors for anyone purchasing a home, so in certain circumstances, it may determine the type of home you purchase for you.
If you’re looking to move into a newer Chicago suburb, for example, the chances are high that your home will need only minor modifications at most. On the other hand, if your job and children’s schools are close to a historic neighborhood, and if you’re attracted to the aesthetics of a more settled community, you will likely need to maintain your home with basic remodeling investments at the very least. In some cases, the previous owner may have already taken care of basic updates for you, but these modifications are often cosmetic rather than systemic.
What Are Your Financing Options?
Fixer-uppers can be much more affordable for first-time homebuyers, particularly in a competitive market. That said, you’ll also need to consider your home remodeling budget post-purchase, as it may affect the type of mortgage you get. If you’re planning to take on large-scale renovation projects after you move in, you may want to consider applying for a renovation loan (an FHA 203(k) loan, a HomeStyle loan, or a CHOICERenovation loan).
Keep in mind that you’ll want to have detailed cost estimates for your remodeling projects when you’re applying for a renovation loan. In this case, it’s smart to bring your contractor on board early to help you make well-informed estimates.
Are the Bones of the House Good?
Homebuyers looking for a price break by purchasing a fixer-upper should carefully assess the full project cost before committing to purchasing the home. If you want to get a fixer-upper to save money, be sure to have the home thoroughly inspected and appraised before signing your contract. Unfortunately, some fixer-uppers are in such poor condition that they essentially need to be rebuilt. Our advice to our clients is to pick the worst-looking house in the best neighborhood. Verify with your inspector and/ or contractor that the bones of the home are solid, and you'll be in good shape.
How Important Is It To You that Your Home Reflects Your Personality?
For some homeowners, having a space that reflects their identity brings great joy, peace, and comfort. Purchasing a fixer-upper means that you have the ability to customize your home according to your tastes, from custom features like wine cellars to the home’s overall ambiance, materials, and color palette. Even the process of setting a vision and creating a harmonious and beautiful space can be an incredible creative outlet.
Do You Have the Time and Energy to Remodel?
It’s important to balance the question above with consideration for the amount of time and energy you have to take on a home remodel. If you feel stretched and overcommitted, you may not be in the right place to take on an extensive remodel, as it requires a good deal of mental energy and planning throughout the process.
If you’re in a stage of life where you have the capacity to commit to a remodel, on the other hand, it can be a highly rewarding experience. And remember, you’re not alone --you’ll have an experienced team by your side guiding you through every step of the process.