To ensure you're making the most of your investment, however, it pays to take a look at your credit before you buy and begin your remodel. You'll not only need credit to cover the purchase price of the house, but you'll need it for renovation expenses as well.
The first step you should take in your bid to buy a fixer-upper is to check your credit report and score. Websites like www.creditreport.com can help you understand your credit. Understanding your credit will help you know whether or not you can afford to buy a house that needs work and if you'll be able to pay for the needed renovations.
You should also carefully research what your options are for financing your remodel. Learn what your options are, from traditional fixed mortgages to home equity lines of credit, and decide before you buy which type of financing will be best for you. Getting a handle on your financing before you buy can help ensure you stay on budget when you're in the middle of renovations.
When you've got a clear picture of your credit status and financing options, you can start looking at fixer-uppers. When you find a good prospect, have your remodeling contractor walk through the house with you so he can give you a rough estimate of what needs to be done and how much the work will cost.
If you're buying a house that's in basically good condition but just looks dated, you'll have to make some decisions about where to invest your money. Focus on improvements that will not only look good, but will also enhance the value of your home. Resources like Remodeling Magazine's Cost vs. Value report can give you a good idea of how much of your original investment you'll recoup on different remodeling projects at the time of resale.
Once you've signed all the paperwork and the house is yours, it's time to get to work. If you're handy, you may be able to save money by doing some of the renovation work yourself. Projects like painting, adding crown molding and even putting down new flooring are well within the skills of most do-it-yourselfers. More complex projects like drywall, plumbing or electrical work may be best left to professionals.
Whether you do the work yourself, or hire contractors, you'll need to carefully manage all aspects of the renovation to ensure your remodel stays on budget. The excitement of remodeling a house into your dream home can make it easy to get carried away on spending. Keep in mind that remodeling estimates are just that - an estimate. The final tab is rarely exactly what your contractor predicted it would be. Build in at least 10 percent extra to cover emergency overruns, and avoid making any unnecessary changes to the plans while the project is underway.