For those of you looking for a cheap historic home for sale that requires moving, check out the blog of a couple that is in the process of restoring a home they moved to a new property.
Glenn and Denise Bowman purchased a rundown colonial house in Clarksville, Md., for $1 last year and moved it three miles down the road to an upscale neighborhood. They have been busy renovating it ever since.
Their story has even been featured on the History Channel's "Mega Movers-Jinxed House."
Check out their blog to learn more and keep up with their progress on the home.
To find your own historic home, check out Zip Realty which allows you to search based on the year the home was built, and even has an option to search for fixer-uppers.
As you search for historic homes for sale, you may wonder how you're going to finance the restoration of your new home. The bank may not lend you money to buy your fixer-upper until repairs are complete, but you can't actually do repairs until you've purchased the house. What a quandary!
If you want to avoid multiple--and often costly--loans, one program administered by the Federal Housing Administration (FHA) could help you buy and restore your dream home. The 203(k) program will allow you to get one mortgage loan, at a long-term fixed or adjustable rate, to both buy and restore your new historic home.
Here a breakdown of two of types of FHA-administered mortgages:
1. 203(k) Mortgage. If you need to renovate your home or make substantial repairs, you should apply for this loan. The amount of the loan is based on the projected value of the rehabbed property, after improvements.
Here are a few things to think about:
**There is a minimum $5,000 requirement for this portion of the loan (If you do not need major work done, get a Streamline 203(k), as noted below).
**Before purchasing a home, you and a real estate professional will need to determine the extent of the rehabilitation work that needs to be done and a rough estimate of what it will cost (no need for an appraisal at this point). More importantly, you'll need to determine what the expected market value of the property is after you complete the work.
**Don't sign a sales contract until you've applied for Section 203(k) financing. Your lender will get you started on the lengthy and complex loan process. Also, make sure there is a provision in the sales contract stating that the contract is contingent upon loan approval and your acceptance of other required improvements by HUD or the lender.
**Work must begin within 30 days after the loan agreement is executed and should be completed within six months.
**Repair funds held by the lender are released to you after an inspector certifies that the work has been completed.
**This mortgage also can be used to purchase a home that you plan on moving to another site.
2. The Streamline 203(k) Limited Repair Program. This is a newer version of the 203(k) program that is more appropriate if you need to make more "minor" repairs to your home. This program allows you to add up to $35,000 to your mortgage without as much paperwork or hassle as the regular 203(k) if you need to make improvements such as installing a new roof or flooring, purchasing new appliances or painting.
Here's a breakdown:
**Unlike the regular 203(k) program, you're not required to hire professional consultants, licensed engineers or architects.
**The work must be completed within six months
**Major renovation work is not covered
**To get a loan, contact an FHA-approved lender.
Note that 203(k) loans are funded by your lender and not the government, which only administers and insures the loans.
For more information, visit the US Department of Housing and Urban Development Web site.
As you look for historic homes for sale, remember there are many financing options available. Stay tuned to this blog for more stories on loans and grants.
For more ways to save big on your next historic home, check out Zip Realty, which gives you 20 percent of their commission when you buy a home.
If you will be renovating the historic home you plan on purchasing, consider renting part of it out or using a portion of it as office space to get a tax break.
Using your historic home for income-producing purposes after renovation could make you eligible for the The Federal Historic Preservation Tax Incentives program, which offers a 20 percent tax credit.
In order to qualify for the credit, you must meet the following requirements:
1. Your property must be used for income producing purposes for at least five years after rehabilitation (e.g., offices, retail, apartment housing). The credit cannot be used to rehabilitate your personal residence, but if you rent out part of your house or use part of it for business purposes, the amount of rehabilitation costs spent on that portion of the residence may be eligible for the credit.
2. Your building must be listed in the National Register of Historic Places or included in a National Register Historic District. Also, if your state historic preservation office deems your building eligible for listing in the National Register, if your building is included in a local certified historic district, or if your building is in a historic district potentially eligible for listing in the National Register, you may qualify for the credit.
3. You must meet the Secretary of the Interior's 10 standards for rehabilitation. These standards do not require restoration, but allow some alteration to allow your building to "provide an efficient contemporary use." However, the rehabilitation project must not damage, destroy, or cover those exterior or interior materials or features that define the building’s historic character.
4. Your project must cost more than the pre-rehabilitation cost of the building. Generally, this "substantial rehabilitation test" must be met within two years or within five years for a project completed in multiple phases.
To qualify for the tax credit, you must submit a lengthy application to the National Park Service. Fees range from $250 to $2,250.
The National Park Service urges you to wait for approval before beginning work on your project. "Sometimes projects need to be modified to meet the Secretary of the Interior's Standards for Rehabilitation, and meeting conditions for approval can be difficult if the work has already begun," NPS says.
For more information, visit NPS' Federal Historic Preservation Tax Incentives program page.
Source: National Park Service
Keep reading the Historic Homes for Sale blog for more on tax incentives and grants.
WILMINGTON, NC--When you're looking to buy a historic home that has already been restored, make sure the current owner can show you documentation that the work was done correctly.
That advice comes from historic home owner Bunky Bruce who told NewsChannel 3 he and his wife, Linda, spent eight months renovating a 115-year-old house they purchased in downtown Willmington, N.C.
Here's some advice Bunky gave NewsChannel 3:
"'Look for proof, look for documentation, when someone says it has a new roof on it, get them to prove it to you that it has a new roof on it -- here's the documentation, here's when I did it, here's the person.'
He says you should look for a realtor who specializes in the historic district and people who have experience working on historic homes if you are going to renovate.
'Make sure you get professionals involved with you that understand this type of building construction, and understand historic properties,' Bunky said.
Bunky also recommends figuring out what your budget is and then building in a 20 percent "fudge factor."
For the full story, click here.
Source: WWAY, NewsChannel 3, the ABC television affiliate in Wilmington, N.C.
Do you have tips on buying a historic home? How do you budget for restoration costs? We welcome your comments by clicking the "comments" link at the top of this story or by e-mailing us.
**For more questions that you need to ask when buying a home, check out the HomeBuyer Defense Guide. This book, written by a real estate appraiser, will also tell you how you can find out the real facts about any updates, remodeling or modifications to the home so you aren't left in financial hot water.
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