The amount of work and money needed to maintain a historic home can differ, depending on the property’s condition. However, if you go in prepared, this labor of love can be much less challenging. Here, Redfin offers six factors to keep in mind before purchasing a piece of history.
1) Historic districts have their trade offs
Living in a designated historic district might limit what you can do to the exterior of your home, including your choice of paint color and windows. Check with your local planning department to determine whether there are any restrictions. Districts that only are listed on the National Register of Historic Places don’t control what you can do to your home, but areas on a state or local registry could have regulations.
2) Historic preservation easements are binding
Setting up a historic preservation easement will protect the integrity of your home in perpetuity. You pay a qualified preservation organization or government agency to hold the easement, a legal tool that places restrictions on what can happen to the property and requires future owners to adhere to them. Your payment for an easement might qualify for a federal tax deduction. Before purchasing a historic home, the National Trust for Historic Preservation recommends that you find out if an easement is already in place, and if so, what it entails and who holds it.
3) Maintaining a historic home’s integrity can get pricey
There’s a reason historic homes last: They tend to be structurally sound. But if your home happens to need extensive repairs, the costs can add up. Make sure you have a steady income and a substantial amount of cash in savings. You don’t want to be caught off guard by repair or replacement costs. Also keep in mind that some state historic preservation offices offer grants or tax programs for homeowners.
4) Getting financing and insurance can be difficult
There are many methods of financing your historic home purchase, even if you’re a first-time homebuyer. However, some lenders might hesitate if the home needs extensive repairs. Although you might not be able to use a traditional loan backed by the U.S. Department of Housing and Urban Development, for example, a private HUD Title 1 loan can go toward smaller repairs. And a loan called a 203(k)—also known as rehab mortgage insurance—can go toward the purchase and rehab cost. You could also take out a Fannie Mae HomeStyle Renovation mortgage for the same purpose. Insurance companies may show reluctance to sell you a policy based on the assumption that replacement costs are higher for designated historic homes. But this isn’t always the case, particularly if your home is only federally registered and therefore free of restrictions. You may have to spend some extra time shopping around for homeowners insurance.
5) Old homes can come with old problems
Although lenders usually don’t require a home inspection, getting one is a good idea before making a commitment on any home. As a good rule of thumb, try to find an inspector who has experience dealing with historic homes and the issues they present, such as the possible presence of lead paint or asbestos.
6) Your modern-day wishes may not fit
Imposing your desire for a fully equipped kitchen or a master bathroom onto historic architecture may be a challenge. They could devalue your home if they already exist and were added without the integrity of the historic value in mind, or if you plan on making additions without being careful. Ask yourself: What are your goals in purchasing a historic home? What can you live without? How important is the home’s original character to you, and how will changes to that character affect the sale price?