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I want to buy my late father's outdated home, is it best to buy outright or take out a mortgage?

I currently have a home with a mortgage & a small amount of equity - I have the opportunity to buy my father's 50 year old home in a better neighborhood in a more central location in our city. My siblings & I have agreed on a price for their portions of dad's house. The house needs about $40 k in renovations (bathrooms updated, guttering, new windows, etc) The house is sound but needs a fair amount of cosmetic updating;  a lot of which my wife & I can do ourselves. From my inheritance I will have sufficient funds to buy it outright & take out a loan for updates or would it make more sense to take out a mortgage & use a portion of my inheritance to make the updates?
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July 16 2013 - US
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Answers (3)

Right now interest rates are still decently low in the end it all boils down to this off coarse you will save more money just getting a loan to be applied to updates due to it being much smaller in scale. If the property needs a tremendous amount of work it might not even pass appraisal whats the conditions of the roof, foundation, HVAC system, Plumbing, Etc. Yes, you can purchase the property using a full blown out FHA 203k loan however very few lender still have the ability to do that these days. This is where your mortgage and repair escrow is added together in the end. Honestly, if you have the money to purchase the property I would do so cash and get out small loans to upgrade, update, fix, etc. Good luck to you.
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July 16 2013
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Thanks for the prompt response. No there is no mortgage on the home -I am simply buying out my siblings inherited portions of the home & would take full ownership, hopefully sell my current house & move into dad's house once major updates are complete. 
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July 16 2013
When you say you are buying it, is there a mortgage on it now? If not then you must mean you are buying it from the others in the family that inherited a part of it, buying them out in other words? Once you buy out the siblings you could get an equity loan for the repairs or go for a 203k FHA loan if it qualifies for that. You should speak to a lender that does 203k loans to ask about that.
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July 16 2013
 
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