About Real Estate: Tips for buying a ‘fixer-upper’
Homes that need repairs typically are offered at a deep discount, but buyers must be careful.Q. I would like to buy a fixer-upper because there are a lot of them in my neighborhood, especially because of all the foreclosures. Do you have any tips?
A. Sure. The first is, be cautious.
Fixer-uppers often are great bargains because their owners typically want far less than neighboring sellers whose homes are in better shape. The best fixers are those that need only inexpensive cosmetic improvements, such as fresh paint or new shrubbery, rather than those that need major repairs.
Don#146;t overestimate your ability to make the repairs to a fixer yourself. Anyone can paint a few walls, but upgrading a home#146;s electrical or plumbing system likely will require the use of an expensive contractor, which can cut deeply into your eventual resale profit.
Make sure that any offer you make is contingent on a satisfactory report from a professional home inspector, and then get several bids for any needed work that the inspector may uncover before moving ahead with the transaction.
Your letter didn#146;t state whether you plan to buy the fixer for use as your own home or as a rental-property investment. But either way, you also will need to assess the #147;livability#148; of the house while repairs are under way. Major fix-up projects can take weeks or even months to complete, but you#146;ll still be paying the mortgage even if the house isn#146;t occupied.
Q. You recently wrote people are allowed to get one free credit report from each of the country#146;s three big credit bureaus every year. Now a friend tells me that credit scores are available for free, too. How do I get my free credit score?
A. For the past several years, a federal law has required the three big bureaus #8212; Experian, TransUnion and Equifax #8212; to each offer a free credit report to individuals once per year by calling the group#146;s toll-free number, (877) 322-8228, or by visiting its www.annualcreditreport.com website. But the law did not require the bureaus to also offer a free credit score, usually a three-digit ranking that#146;s designed to help mortgage lenders and other creditors predict whether a borrower will be able to make future payments on a new loan.
All three bureaus were instead able to charge for a score, a fee that now averages about $15. The trio will offer the figure for #147;free#148; only if a person also signs up for an expensive credit-monitoring plan.
The latest changes in the nation#146;s credit laws took effect in late July. They allow bureaus to continue charging for the credit scores they provide, but lenders themselves must provide individuals with a free score if their application for a mortgage or other loans is rejected or if the borrower must pay a higher-than-advertised interest rate because the bank considers the applicant#146;s credit score too low.
To illustrate, let#146;s say that you respond to a radio advertisement by a lender who promises a 4 percent mortgage to #147;qualified borrowers#148; but then are told you must pay a higher rate because your credit score isn#146;t high enough. The lender must then give you a free credit score to explain why you would have to pay the higher rate, or if it decided to reject your application altogether.
This basically means that most of the people who will now qualify for a free credit score are those with a lousy credit history that requires them to pay more for a loan, or those who don#146;t qualify for a mortgage or other credit at all.
Q. I saw a story on the Internet that said Bank of America is giving away all of its foreclosed homes for free. Is this true? If so, how do I get one?
A. Most stories you read on the Internet have at least a kernel of truth to them. But in this case, the story gave you a very small kernel and far from the whole cob.
Bank of America is not giving away its thousands of foreclosed homes to anyone who wants them. The rumor about the supposed giveaway apparently got started a few months ago, when BofA said it was donating about 150 foreclosed and abandoned homes to the city of Chicago and nonprofit groups in the area for redevelopment in an effort to curb neighborhood blight.
The bank is launching similar programs in other cities, including Detroit and Cleveland. Wells Fargo Co., Citibank Inc. and a handful of other major lenders have either started or are pondering the same types of plans.
Call your elected representatives at city hall for details, but don#146;t expect to get a home for free.
Ÿ For the booklet #147;Straight Talk About Living Trusts,#148; send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.
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