How and why to buy a house with an unfinished upstairs. Tips on the work, process, pros vs cons and financial savings.
Buying a house is generally the largest purchase anyone will ever make in their lifetime. Making the process more affordable and easier to bear is something most people attempt to do. For those people that are handy or have some handy family members, there is an alternative that should be explored that may allow you to buy that new house earlier than you had expected.
By having your house built and leaving the upstairs unfinished you greatly reduce the price that your house initially costs you. Financing less over the 30 year period keeps your payment lower and makes it so that you may be able to move into your house sooner than you had expected.
Reducing the price of your house by 20-40,000 because of leaving the upstairs unfinished at first may also allow you to get a larger house than you could have if you purchased a finished one. Then, finishing the upstairs on your own time, a little piece at a time as money allows will steadily increase your home worth and living area.
The process is not for everyone as a lot of people do not know how to finish an upstairs of a house but really the whole procedure is quite simple. Framing the walls, adding the electrical and plumbing, then sheetrocking, taping, mudding, and painting are the initial steps. Carpet, trim and finish work will finish up the process. Getting some help from a handy family member or specialist on a couple of the areas may be necessary but will still cost you a lot less.
In buying a house unfinished, you will need to devote one room downstairs to be designated as a bedroom until you move upstairs. As a bedroom it will need a closet specifically for it. After you move upstairs later you can always close over the closet if necessary. The reason you need a bedroom with a closet is for resale value if you sell your house before the upstairs is finished. The mortgage company wants to know that the house could be resold if you default on your mortgage.
Finishing the upstairs of a house can be a very gratifying process, but one that may take anywhere from six months to a couple years depending on the time you have to devote to the process, the cash flow available that you can purchase materials with and how complicated of a layout the rooms are.
Increasing your equity in your home is one large benefit from doing the process this way. By buying your house this way and then putting sweat and time into it, you are increasing your home's value by a large margin. Selling your home later on you will realize a nice profit on all the energy that you invested in completing your home.
Getting a mortgage company to accept your loan for a home that is unfinished may be a little more tricky than a normal loan. The reasons for this include the fact that they are giving you a loan for something that would be tougher to resell than a completed house if you could not make the house payments. Many times by having an unfinished home you will not qualify for some of the special mortgage products such as FHA loans or other discounted programs. Not everyone can qualify for these anyway depending on your financial situation.
Knowing all the pros and cons to having your house built leaving the upstairs unfinished will give you another option to consider as you move into this all important decision. Making the process easier and more affordable may make it possible to realize your dream of home ownership earlier than you had expected.
