Historic homes are beautiful houses that have a long and interesting history. You might have your eye on one that the same family owned for years or one that has national, regional, or local recognition. While these homes are gorgeous, they come with some drawbacks that might make you think twice about owning one. They may require more work to bring up to code or make more modern and have features that you never saw in a previous home. Learn how to protect yourself when buying a historic home to save time and money.
Look for Restrictions of Historic Home
One thing you need to know about historic homes is that they often have restrictions that prevent you from doing some of the work you planned. A good example is a home that is on the National Register of Historic Places as you may find that you cannot make any changes to the home without approval from the Department of the Interior. If you buy a home in a homeowner’s association (HOA), the HOA will require that you use their guidebook when you make improvements or upgrades. You usually need to ask for approval and submit your plans before you can do any work.
Get an Inspection
When the market is hot, buyers often make offers on homes without getting an inspection first. You should never buy a historic home without first getting an inspection. The inspector will make a list of anything they find that you will need to fix later such as broken tiles on the roof and signs of flooding in the basement. You’ll also find out if the home is safe for your family. The inspection gives you a way to negotiate on a historic home, too. You can ask the sellers to reduce their asking price or make some repairs for you. The cost of a home inspection ranges from around $200 to more than $500.
Focus on More Than Just the Historic Home
You should always look at more than just the historic house because many of these homes have outbuildings that are on the property. An old farm, for example, may have one or more barns, a corn crib, and a smokehouse. Even if you buy a historic home in the middle of the city, it can include a garage and/or carriage house. You need to look at all of the buildings to see how much work they need. Working with restoration contractors in Denver or your local city can help you get a better understanding of how extensive the restoration will be.
Pay for an Appraisal
An appraisal is different from an inspection. While an inspection reveals any potential problems with the house, the appraisal simply tells you how much it’s worth. The professional will compare similar homes that recently sold along with the home’s features, overall size, lot size, and other factors to give you the bottom line. The appraisal can help you see if you can afford to buy the home based on the mortgage you got. You can also use the appraisal to see if the home is worth your money based on the tax credits you receive. Many states have programs that reduce the amount of taxes you owe based on how much you spend to renovate a historic home.
Seek Lender Approval First
Never look at historic homes for sale in your area until you get lender approval. Most lenders have a pre-approval process that lets you qualify for a mortgage before you start shopping. Make sure the lender knows that you have an interest in older homes. Some lenders are leery about loaning money to borrowers for older homes because they require so much extra work. There are a few government loan programs that help first-time and other borrowers qualify for loans for these homes. Keep in mind that you usually cannot borrow money to pay for any repairs though. You’re responsible for covering those costs out of your pocket.
Looking at all of these factors is a good way to see if buying a historic home is right for you. To protect your investment, you need to get an appraisal and inspection. Make sure you look at any renovation restrictions you might face and all of the buildings that are on the property, too.