Author Topic: Buying a Farmhouse  (Read 738 times)

TheCastle

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Buying a Farmhouse
« on: May 04, 2017, 01:34:54 PM »
My wife and I have planned all along to move to the country some day.  Well last night, I learned about a property that might suit our needs.  Centrally located between my work and her family (and her work when she goes back) so location is pretty ideal.  The property belonged to my great uncle who recently died.  It now belongs to his families trust who wants to sell the entire property.  It is a farmhouse and outbuildings on 80 acres of tillable land.  They plan to separate the land from the house and sell separately.  The property is currently rented to a tenant that has no means to purchase the property themselves.  This house will be a fixer upper for us.  I haven't been in the house in over 10 years but if nothing has changed since then, it definitely will need some upgrades.

So I basically need help figuring out how to pay for everything.  We don't have a huge budget surplus to work with.  We have about 41K in equity in our current house, but have 2 years left on the first time homebuyers grant.  So we have to live in the house for that long and my wife would like to keep our daughter in her current school that long.  We'd also like to keep our current house and rent it out after we move into the new house.  So I'm thinking my options are:

1.  Pay back the prorated portion of the grant and sell our current house.  Purchase with a traditional mortgage and take a construction loan out for the upgrades.
2.  Scrape together enough for a 5-10% down payment and purchase with a traditional mortgage with PMI.  Rent the farmhouse out for 2 years then upgrade.
3.  Refinance our current home and purchase with a traditional mortgage with PMI.  Rent the farmhouse out for 2 years then upgrade.
4.  Use a HELOC for the down payment on the farmhouse. Rent the farmhouse out for 2 years then upgrade.
5.  Use a FHA 203(k) loan, put 3.5% down and do the upgrades immediately.  Pay back the prorated portion of the grant and rent our current house.

I hope that all makes sense.  I'm definitely not well accustomed to real estate purchasing and financing.

So, my question is which method will be the best?  And will any of my options not work?  Thanks!!
« Last Edit: May 04, 2017, 01:36:46 PM by TheCastle »