If you’re shopping for a home and see “as is” or “fixer-upper” in a listing, it might seem like a bargain. But these properties often come with challenges—especially when securing a mortgage. As a mortgage agent, I’ve seen how these listings can make lenders cautious. Here’s why.
What “As Is” and “Fixer-Upper” Mean
When a home is sold “as is,” the seller won’t make any repairs. You take the property in its current condition, which could range from minor fixes to serious problems like outdated wiring or structural damage. While these homes can be a good deal, lenders often see them as high-risk.
Why Lenders Are Wary
Lenders want to ensure the home you’re buying will hold its value. Here are key reasons why these properties can make getting a mortgage tougher:
Low Appraisal Risk
Homes in poor condition often appraise for less than the asking price. If the appraisal comes in too low, the lender may not finance the full purchase price.
Property Condition
Structural or safety issues like mold, old wiring, or a bad roof raise red flags for lenders. These problems may need to be fixed before they’ll approve a mortgage.
Insurance Challenges
Homes with serious issues can be tough or costly to insure, which may delay or block your mortgage approval.
Renovation Loans May Be Needed
If the home needs major repairs, you might need a renovation mortgage, which requires more paperwork and stricter terms.
Why “As Is” Listings Raise Concerns
When realtors use “as is” or “fixer-upper” in the listing, it can signal deeper problems, like:
System Failures: Outdated plumbing or electrical systems.
Water Damage: Hidden issues like mold or foundation damage.
Outdated Codes: Older homes may need expensive updates to meet current building standards.
For many lenders, these issues present too much risk. They worry about the resale value if you default, and this makes it harder to get financing.
How “As Is” Impacts Your Mortgage Options
Buying an “as is” home means fewer mortgage options:
Higher Down Payments
Lenders may require more money down to offset the risk.
Stricter Terms
You might face higher interest rates or shorter loan terms.
Renovation Mortgages
These loans cover both the purchase and repairs, but require detailed renovation plans and have stricter conditions.
My Advice as a Mortgage Agent
Buying an “as is” or fixer-upper home can be rewarding, but it’s important to be prepared. Here’s how you can increase your chances of success:
Get a Home Inspection: Understand the full scope of repairs before making an offer.
Budget for Repairs: Plan for both expected and unexpected renovation costs.
Work with the Right Lender: I can help connect you with lenders who specialize in these types of properties.
Consider a Renovation Loan: If major repairs are needed, a renovation mortgage might be your best option.
Buying a fixer-upper is possible with the right plan. If you have questions about financing, I’m here to guide you through it!
Contact me with specific or general questions! 