One of the most common financial rules of thumb is the “30% rule” for buying a home. Like many financial rules of thumb, though, the 30% rule is best taken with a grain of salt. In fact, rather than getting hung up on this rule of thumb, it makes more sense to examine your financial situation, and your individual needs, and get a mortgage that fits your circumstances.
The flipside of the historic home experience is that they typically need endless care and maintenance. Wood floors and plaster walls need a lot of upkeep. There are many special considerations that need to be made with regard to renovations and structural problems if you’re in the market for a historic home.
Just like any home, there are lots of important things to think about before you buy. Having a historic home can complicate matters because of all the upgrading and problems involved. Here are some pros and cons to consider before you take the plunge to purchase that beautiful historic home.
Pros of Buying a Historic Home:
Tax breaks – A myriad of tax breaks exist to encourage homeowners to take responsibility for the upkeep of historic properties. You can save money on taxes with anything from the Federal Historic Preservation Tax Incentive to state incentives and grants. If you do your research, you’ll save tons on taxes.
Return on investment – Research shows that property values increase in historic districts significantly more than the rest of the market.
Established neighborhood – Chances are your historical property will be in a neighborhood with mature landscaping, and little construction. You’ll generally have some input on any major changes going on in the neighborhood because they’ll have to go by a review board.
Gorgeous details – One of the great appeals of historic homes is the gorgeous woodworking and other fine details that you just won’t find in homes built today. There’s something to be said for the beauty of older construction. You’ll find details and other features that don’t exist in newer homes, like pocket doors and stained glass windows.
Cons of Buying a Historic Home:
Limitations on renovations – In keeping with the preservation of the historical property, you might not be able to make the renovations you want, especially on the exterior of the property. For example, that deck you wanted to add to your home may be prohibited in the preservation guidelines. Make sure to get a copy of the preservation guidelines before you begin any renovations, so you’re not wasting time and making plans for projects that can’t happen.
Unexpected problems – Chances are you’ll run into some unexpected problems while doing your renovations. Combat this by budgeting extra money for each renovation. These issues can really drive up the cost, but if you’re prepared financially, it shouldn’t be a problem.
Lead and asbestos – Old homes are notorious for having problems with lead and asbestos. Lead can be found in plumbing pipes and in interior and exterior paint. Asbestos can be found behind your walls in basements or attics. These things can cost thousands of dollars to repair and replace.
Oil tanks, wells, cesspools, and septic tanks – If you’re doing a major renovation, you might find a costly surprise buried beneath your lawn. It’s pretty common for older homes to have tanks for storing heating oil buried in the lawn, as well as cesspools, wells, and septic tanks. There are several options for taking care of this problem, ranging from filling the tank with rocks and solid materials to digging up the tank and disposing of it entirely, but this can be costly to do.
Electrical and plumbing problems – Watch out for homes without an updated plumbing or electrical system. These can be really costly if you need to do a major overhaul. Old homes often don’t have enough wattage to support modern conveniences, so you’ll need to upgrade the electrical system if a previous owner hasn’t already done so.
Expensive material costs – If something breaks down or needs to be replaced, and it hasn’t been made in 50 years, it’ll be more expensive to replace. If you’re looking to keep things authentic-looking, custom pieces can cost a pretty penny.
Buying a historic home is not a cheap endeavor. Ultimately, it’s up to you to decide whether or not the work and money you’ll have to put into your home is worth it. You’ll have something unique, and something to be proud of. You just have to decide if the sentimental value is worth more than the actual cost.