10 Tips for

FINANCING YOUR HISTORIC HOUSE

1. Collect supplemental information for your mortgage.On top of the usual information, lending institutions may also require information about deed restrictions, easements, or historic designation regulations.

2. Anticipate extra fees.Many extra fees and costs pop up when you buy a house. These include legal fees for closing on the property, inspection costs, and filing fees.

3. Consider how location impacts your lending options.Some houses are located in areas where banks charge higher interest rates. In these cases, the lender may require borrowers to obtain additional loan guarantees or increase their equity before approving the mortgage.

4. Be prepared for other potential financial arrangements.

If the inspection reveals major repair problems, the lender might require evidence of your ability to pay for the necessary work. Also, if you plan to get the repair money as part of the mortgage, the lender may escrow that portion of the loan to pay the contractors directly.

5. Investigate if a property is insurable before you commit to buying it.In some cases, insuring a historic house costs more than insuring a new house of a similar size. Check out National Trust Insurance Services to learn more about insurance for historic properties.

6. Consider your taxes—and consult professionals.Typically, historic houses will have the same property tax burdens as new ones. You may, however, be eligible for federal historic rehabilitation tax credits or tax deductions on donated preservation easements.

7. Get the house appraised (step 1).

A professional appraiser uses a four-step process to determine a historic house’s value. First, the appraiser defines why the appraisal is being conducted, what restrictions and easements are associated with the property, and what the current local real estate market conditions look like.

8. Get the house appraised (step 2).Next, the appraiser will collect and examine a variety of information—from local mortgage lending rates to zoning laws—to derive the property value.

9. Get the house appraised (step 3).The appraiser then estimates the value of the property as if it were vacant land (compared to prices of comparable vacant lots that have sold recently).

10. Get the house appraised (step 4).In the final step, the appraiser will apply one or more of the “three approaches to value,” which include “market approach,” “cost approach,” and “income approach.”

The National Trust for Historic Preservation works to save America’s historic places. Preservation Tips & Tools helps others do the same in their own communities.

For more information, visit SavingPlaces.org.

Photos courtesy: Scott Smithson/Flickr/CC BY-NC ND 2.0; KenRatcliff/Flickr-CC BY-2.0; Ken Lund/Flickr/CC BY-SA 2.0; Jon Dawson/Flickr/CC BY-ND 2.0; Horslips5/Flickr/CC BY-2.0; Horslips5/Flickr/CC BY-2.0; J. Stephen Conn/Flickr/CC BY-NC 2.0; NCInDC/Flickr/CC BY-ND 2.0; NCInDC/Flickr/CC BY-ND 2.0; John Vosburgh/Flickr/CC BY-NC-ND 2.0; Tony Alter/Flickr/CC BY-2.0