On the surface, the house looks great – fresh paint, new appliances in the kitchen, new carpet throughout and maybe an updated bath. The colors are modern and appealing and the home has been staged to perfection. That’s the goal of a flipped home – to make you feel like you could move right in without being bogged down with repairs and updates.

But, beware. While some home flippers are good, others are unskilled amateurs who buy homes that are undervalued due to poor condition. They move fast to get the home back on the market quickly to minimize their holding costs. They seldom take time or spend the money to address high-cost items, like plumbing, foundations, and electrical replacement.

How do you know whether the home is a flipper-upper?  Get as much information as you can about the home’s history.

• Has the home sold within the last six months or year for a much lower price than the current asking price?
• Is the home owned by a non-occupying seller?
• Has the seller owned other homes for short periods before reselling them?
• Are the updates largely cosmetic? New sink, old pipes?
• Were permits obtained where necessary?
• Is a detailed seller’s disclosure, recent home inspection, and list of improvements available?

Your Berkshire Hathaway HomeServices Tomie Raines real estate professional can help you get vital information about the home so you can look past the dazzle of new décor and evaluate this home fairly compared to other properties in your price range.

You want to find the perfect home, but you’re afraid of the things that you might miss. What if big repairs rack up costs after you move in? All homes require upkeep and maintenance, and certainly some require more TLC than others. The important part is knowing what parts of the home need help, how much they cost, and whether it makes sense with the price tag. We made a list of things to look for in a home so you can look out for expensive surprises.

1. Old or Damaged Roof

Your home’s roof is one of the most expensive things to replace, which makes it an important thing to look for in a home before you buy it. A close look at the roof is usually a part of a good home inspection, which is generally required before you purchase a home, but you can save yourself some time by looking closely when you view the house.

If you notice the roof shingles are visibly peeling, discolored, there’s excessive moss or plant growth, or the roof was replaced over 20 years ago, it’s a good idea to factor this into the price of your home.

2. Old or Damaged Furnace

Your furnace is another expensive and critical thing to look for in a home that can go disastrously bad if it’s not taken care of. Take a look at the furnace, and get any details that you can. When was it replaced? When was is serviced? Does it work? Even in the summertime, you should turn on the heat and test it out as you inspect the home. You don’t want to discover a dysfunctional furnace when winter arrives.

3. Inadequate Insulation and Drafty Windows

Heating and cooling costs add up quickly, especially in large or old homes (even more so in large, old homes). Worn-out seals around windows and doors, or single-paned windows are common culprits of high heating and cooling costs. Though these are most visible, they are not usually the most costly thing to look for in a home when it comes to heating and cooling. Attic insulation (or lack thereof) is generally a bigger indicator of high heating and cooling costs.

Cold and hot air mingle throughout the year through three processes; conduction, convection and radiation. Convection and radiation both affect the attic area much more than the windows or doors. Convection causes warm air to rise towards the ceiling, while conduction and radiation cause it to transfer from the ceiling to the attic, then the roof, and out. Insulation will slow this process and keep warm air trapped longer. The reverse occurs in the summer time; insulation slows the movement of heat from the sun through the roof, attic, ceiling, and the rest of the home.

Look at the windows, doors, and the attic to get a good picture of improvements you might have to make, and what your heating and coolings will look like initially.

4. Bad Grading

The slope, or grade, around your home should flow outwards, so your home is on a high spot and rainwater naturally moves away from your home. If there are high spots in the yard and puddles close to the home, the grading will cause water to sit around the foundation. This is an important thing to look for in a home, as it can be expensive to fix. As you walk around the front and back yard, be mindful of the grade and any wet spots. While a few hills are not deal-breakers, the home should not sit in a generally low area of the property.

5. Unsteady Foundation

If the foundation of the home isn’t steady or it’s starting to sink, it can cause serious structural problems to the rest of the home. All home foundations “settle” to some extent because the ground under and around it also inevitably shifts. However, excessive water accumulation, which can occur with a bad grade (see above) or in properties close to lakes or rivers, can cause the foundation to become dangerously unsteady. If you notice cracks in the basement floor larger than ⅓ inch, misaligned door frames or windows, or uneven places in the foundation, it may be a bad sign.

6. Leaky Plumbing

Some plumbing problems are relatively easy to fix, while others require much larger investments. When looking at sinks, faucets, drains and other fixtures, don’t be afraid to open cabinets and check for leaks. If you see multiple leaks, rust, or other problems, it indicates the plumbing was not done professionally, and this may also be the case with pipes you can’t see or readily access.

7. Hazards

Important things to look for in a home may also include threats outside the home. If the home is located in an area that has flooded, it’s more likely to flood again. This is an especially important consideration around lakes, rivers, or former wetlands, which occur widely across the Lansing area. Consider other, lesser-known hazards as well, such as sink-holes, lead incidence in water, falling trees, bad air quality, or urban blight.

8. Small Repairs

A series of small repairs can add up quickly, and they can be easily missed. These are important things to look for in a home, and these seemingly minor details can be easily overshadowed by focal points. If you noticed several leaky sinks or drains, damaged rain gutters, badly insulated windows, and other small issues, add them up. How much are all of these small things really going to cost? Don’t let these repairs get out of hand.

9. Big Remodeling Projects

Focal points like big, cozy fireplaces, wood floors, walk-in closets, and chic, new light fixtures can be seductive, but they can distract from the bigger picture. Look at the appliances that come with the house; are they in good working order? Or will they probably require repair or replacement in a few years? Will the bathroom have enough space for you and your family, or do you picture remodeling? While it’s tempting to focus on a home’s potential, make sure you are realistic about what you can afford and what you can take on.

While it’s important to focus on the positive elements of a home, make sure you are also being realistic. Remember these 9 things to look for in a home and you can negotiate with your Realtor before you purchase. This way, you won’t be overwhelmed with the costs of repairs or updates, and you can still have the home of your dreams.

Buying a home is a big step, and it can be complex. For most, the biggest hurdles when buying a home are income and credit score. What income and credit score do you actually need for a mortgage? It may be more attainable than you think. Let’s take a closer look at what you really need to get a mortgage, and what type of mortgage you can get.

You already know that the income that you need for your mortgage depends on the price of the house you want to buy, and the down payment that you have. You might not know that the type of mortgage you get also plays a role. This article focus on the two most common types of loans; government-backed and conventional.

Government Backed Loans: FHA, VA, USDA
A government-backed loan is not actually provided by the government, but it is secured by a government agency, like the Federal Housing Administration (FHA), United States Department of Agriculture (USDA) or Veteran’s Affairs (VA). Each of these has slightly different requirements, but the most common is an FHA loan. We’ll use FHA loan requirements in this blog post. Keep in mind that the FHA secures the loan, but does not offer it; you’ll work with a bank or another lender.

Conventional Loans
A conventional loan follows guidelines set by Fannie Mae and Freddie Mac, which are publicly traded companies that are regulated by the government. Conventional loans are also offered by private lenders, but the requirements are different. There are different types of conventional loans, such as adjustable rate mortgages (ARMs) and jumbo mortgages, but we will deal with the most common type, a fixed-rate mortgage.

What Credit Score Do I Need for a Mortgage
Both government loans and conventional loans have income requirements. Income requirements can increase or decrease depending  your credit score and your down payment amount.

Your credit score will determine if you qualify for a loan and what your loan terms will be. Keep in mind that the details of your credit score, such as late payments, as well as your employment history and bankruptcy record will also play a role. Your credit score will also play a role in determining your interest rate. You can improve your credit score by consolidating and paying off debt, and making payments on time.

FHA Loan Credit Score Requirements
Borrowers can have a credit score as low as 500, but to qualify at that level, you’ll need at least 10% down. To qualify for the 3.5% minimum down payment, you’ll need a credit score of at least 580.

Conventional Loan Credit Score Requirements
To qualify for a conventional loan, you’ll need a credit score of at least 620, though many lenders require at least 640. If you want to work with a higher debt-to-income ratio of 50%, you’ll need a credit score of 700.

If your credit score or income aren’t yet up to loan term limits, make a plan for improvement. Talk to a financial advisor about consolidating your debt and improving your credit. Take a look at your monthly budget and see if you can make any cuts so you can save up for a down payment. With patience and careful planning, you can start looking for a home sooner than you think.

Single-family homes and condominiums offer vastly different lifestyles, so it’s helpful if you know what’s in store when you buy a home with shared walls.

Condos are most frequently  located in areas of denser population near highly desirable work, recreational or shopping centers such as the Michigan State University campus.  You’ll be close to public transportation, and live in an home that is convenient to restaurants and shopping.  But you’ll be living in close proximity to and sharing walls with other condo owners…you may hear your neighbors playing music and feel as if you’re living in an apartment.

Lenders have certain requirements for condos that don’t apply to single-family homes. For example, FHA-approved lenders insist that 80% of the condo owners are owner-occupants. You’ll have to obtain the financial records of the homeowners’ association (HOA) to determine how many owners are delinquent in dues, how many units are rented out, and whether the HOA has enough in “reserves” or savings to perform necessary maintenance such as replacing a roof for the entire building.

Most condos offer shared amenities like a community center, swimming pools, workout rooms and so on, giving you access to more luxuries than you’d otherwise have. But the key word is “share.” To keep things nice, there will be rules to follow, which are in place to protect residents and their investment.

You own the airspace in your unit while everything else is owned collectively, so expect to pay monthly dues proportionate to your building’s condition and its amenities.

Some houses need a little TLC to become beautiful homes. These old or damaged homes often have layers of charm underneath the wear-and-tear, and many prospective homeowners have trouble deciding between a newer, more expensive, move-in ready home and buying a fixer upper. When approaching the lovable —but potentially problematic —fixer upper, it’s important to weigh the pros and cons carefully.

Here are the Pros and Cons of Buying a Fixer Upper

Pro: The Price is Right
The primary appeal of buying a fixer upper is its low price. Whether the house displays cosmetic defects, interior damage, a rough exterior, or something else, these noticeable issues inevitably drive down the price. Evaluate the home’s listing price, its condition and how much repairs could cost carefully to be sure you’re getting a good deal.

Con: Fixer Upper Financing Trouble
Though the price might be lower, getting financing when buying a fixer upper can be tough. Most lenders don’t offer favorable financing options for a home that needs a lot of work. It may be a struggle to find a suitable lender and the rates or mortgage structure is likely to be less-than-ideal.

Pro: Fast Track to a Great Neighborhood
Buying a fixer upper is an easy way to get into a great neighborhood that you otherwise might not be able to afford. A fixer upper can bring you closer to top performing schools, your workplace, parks, or other amenities.

Con: The Uncertain Future of Buying a Fixer Upper
Unless you’re a seasoned house-flipper, it can be difficult to know how much work the house really needs. Damages that look like cosmetic defects may actually be symptoms of structural damage, mold, rot, insect damage, or other costly problems. When buying a fixer upper it’s important to get a detailed home inspection to ensure you’re prepared.

Pro: Building Equity
If a move-in-ready home already has the most modern amenities and the best features in the neighborhood, it’s difficult to make any improvements and increase the home’s equity. Buying a fixer upper gives you room to grow and every improvement will translate into value you earn through sweat equity. Even a few simple DIY projects that build equity can make a big difference.

Con: Unexpected Problems
A fixer upper is likely to bring unexpected problems at inconvenient times, such as leaky pipes, a leaky roof, broken water heaters, flooding basements. Going home won’t always mean relaxing, but the start of a second job. When buying a fixer upper, make sure your life and schedule allows for flexibility.

Pro: No Bidding Wars
In a seller’s market it’s not uncommon to see bidding wars on popular, move-in ready homes. However, fewer buyers are ready for a fixer upper and many are not able to take on the job. Buying a fixer upper gives you more room for negotiations with the seller, without other buyers getting in the way.

Con: Not the Right Time or Place
Depending on the house you are looking at, you may need to be in the right situation to take on a fixer upper. If the house needs so much work that it isn’t livable, you’ll need to have another residence in the interim. If you have a family, the house might not be safe for children. You’ll also need either home improvement skills or connections with experts who can help. These two factors could make buying a fixer upper outside of reach.

Pro: Lower Property Taxes
Property taxes are levied based on the sale price of the house, meaning you might be paying taxes on an older $100,000 house with the square footage, property, and neighborhood of a $150,000 house. This will lower your monthly costs of owning a fixer upper, making it a more manageable expense.

Con: A Long, Expensive Road
A fixer upper is likely to require a steady stream of money and hard work, which adds up quickly. While budgeting for a move-in ready home concludes with the sale, budgeting for a fixer upper only begins with the sale. It takes caution and discipline to keep from going over budget. When buying a fixer upper, you’ll need to ensure that you create a realistic monthly home budget and stick to it.

Pro: It’s All Yours
Anything that needs work on a fixer upper is an opportunity for complete customization. You get to make all the decisions in your home, from new flooring to paint to new roofing and siding.  When buying a fixer upper, you can put your signature on each part of the home and truly make it your own.

Con: Old Age
Most fixer uppers need extra work because they are old. This means you’re likely to get outdated appliances, dated interior design, and low-efficiency insulation and lead paint.  You may also have outdated plumbing, problems with asbestos, faulty electrical wiring, or other hazards. It’s important have the home well inspected as these hazards could be detrimental to your health.

Pro: Tax Credits
When buying a fixer upper that’s particularly old, a percentage of qualified renovations to historic homes can be written off on your taxes. This means you acquire the full value of the equity without the full cost. A range of other tax incentives also exist for making energy-efficient improvements on everything from windows to boilers, which you may need to replace anyway.