Home Improvement Tips to Increase the
Value of Your Home
Buying a home may be a dream, but the initial purchase is
only the introduction to that dream. There's always something about your house
that could be a little better, a little closer to perfect. Now, with a little
planning, you can bring your home closer to your dream of perfection.
Reasoning Your Redo
Many home improvement projects begin with someone in the household
saying, "Wouldn't it be nice ...?" What follows may be a wish for a
remodelled
kitchen or a room addition with space to accommodate every family member's
needs. However, reality usually intrudes upon this daydream: There's only so
much money and so much space. The trick is turning your dreams into reality.
Start by evaluating your needs. Most homeowners consider home improvements for
one of these reasons.
- You need to update the out-of-date. If your kitchen still sports
appliances and decor from decades past, now may be the time to make it current.
- You need to replace fixtures or appliances. Sometimes a home
improvement project grows out of an immediate need to replace broken or
inefficient fixtures. If the sink, tub or toilet has to be replaced, many
people take the opportunity to refurbish the entire bathroom.
- You're selling your home. You want to be sure you'll get top dollar
from the sale of your home, and that may be the rallying cry for some home
improvement projects.
- You're staying put. You thought about moving, but now you realize
that improving your present home is a better option.
- Your family has grown and you need more space.
Improving to Move or Improving to
Stay
You need to evaluate your plans carefully if you're improving your
home to put it on the market. Cutting corners could hurt rather than help your
prospects, but you don't want to go overboard either. Potential buyers may not
want to pay for the extras you have included, such as a hot tub or pool. It's
best to keep changes simple.
Also keep in mind that people viewing your house may not share your
tastes and therefore won't necessarily appreciate the time and effort you put
into finding just the right shade of green paint for the walls.
Improving to sell is easier if you mentally put yourself on the other
side of the proverbial fence: What is important to the home buyer? Here's a
list of remodeling projects that buyers are likely to find valuable:
- Adding or remodeling a bath
- Improving the kitchen
- Adding a new room
- Landscaping
- Adding a bedroom
- Adding or enclosing a garage
If you're remodeling in order to stay in your home, you still need to
avoid over improving it. You'll probably sell someday, and even if your house
is the best on the block, you may have a hard time convincing buyers to pay
extra for the things you found so important. Keep the value of other homes in
the area in mind whenever you consider improvements. Your home's value should
be no more than 20% above the average. That means a $10,000 kitchen improvement
project might be a better idea than a $10,000 hot tub, especially if no other
homes in your area have hot tubs.
Home Maintenance
Unfortunately, some home improvement projects get started because
something is broken. A leaky plumbing fixture may be the first step to a major
bath remodeling. After all, if the tub has to be replaced, why not do the whole
room?
While that's certainly one reason to remodel, you'll generally want
to avoid basing your home improvement projects on immediate need. Proper
maintenance will help to minimize problems. Go over every part of your home at
least once a year. Check out the roof, plumbing, electrical wiring, etc. As
soon as you notice a problem, fix it. Early attention to repairs will help you
avoid a larger expense later on. Remember maintenance does not add to the value
of your home. Repairs, generally, are not improvements but necessities.
Hiring Help
Let's face it, home projects can be expensive. You may be tempted to
tackle them yourself as a way to save money. For small projects, that may be a
smart move. You don't have to wait for someone else to fit your house into
their schedule, and you can take pride in doing the work yourself. Unless
you're particularly handy, however, large home improvement projects are better
left to the pros. If you're remodeling the kitchen, ask yourself if you can
handle the plumbing, electrical and carpentry work. And don't forget that you
need to finish it all quickly, because in the meantime you'll be without a
kitchen and eating out can be costly. Keep in mind, do-it-yourself jobs
generally take more time and you're responsible for obtaining the necessary
permits and inspections.
Hiring people who have experience can save you money and time, too.
For example, these professionals can help you get a custom look using stock
products, and that can be a significant savings. Getting something done
right--the first time--will give you value that lasts for years.
Word-of-mouth is a good way to start looking for home improvement
specialists. Check with friends, business associates and neighbors for
recommendations. Always ask for at least three references - and check them out.
Check, too, with your local chapter of the Better Business Bureau or Chamber of
Commerce. You can find the number in the community services section of your
telephone book. Make sure everyone is in agreement about design, schedule and
budget. Get the details down in writing in a signed contract. You'd also be
wise to check on professional certifications and licenses, where
required, and insist that any contractors you hire are fully insured and
bonded. Contact your town or city Building Department for information. In
particular, make sure contractors carry workers' compensation insurance so that
if any workers are injured on the job, you won't be held liable. Ask for a copy
of their insurance certificates. Also make sure that you or the contractor
secure any necessary permits before beginning the work. Contact your local
Planning and Zoning Commission for information.
Here's a quick overview of some of the pros you may work with in
remodeling your home:
Architect: These professionals design homes or additions from
the foundation to the roof. If you're planning structural changes--adding or
taking out walls, for example--or anticipate a complex design, you'll probably
want an architect. You may pay an hourly fee or a flat fee. Be sure to get an
estimate of the total cost: It can take 80 hours or more to draw up plans for a
major remodeling project.
Contractor: This person oversees the nuts-and-bolts aspects of
your home improvement project, such as hiring and supervising workers, getting
permits, making sure inspections are done as needed and providing insurance for
work crews. You may wish to get proposals from one or more reputable
contractors, based on specific details of your project. Be sure each contractor
bids on exactly the same plan for comparison purposes. Once you've chosen a
contractor, make sure your contract specifies that you will pay in several
stages. It's customary to pay one third when the contract is signed so that the
contractor can buy supplies. The number and timing of other payments depends on
the size of the job, but do not make final payment until all work is
successfully completed, inspected and approved.
Interior Designers: These specialists offer advice on
furnishings, wall coverings, colors, styles and more. They can help save you
time (by narrowing down selections) and money (from the professional discounts
they might receive). When meeting with an interior designer, be sure to talk
about your personal style and preferences. Expect to pay anywhere from $50 to
$150 per hour, or you may negotiate a flat fee of perhaps 25% of the total
project cost.
Financing Repairs
Depending on the scope of your home improvement plans, finding funding
may be a project itself. If the project is small, you may be able to save for
it from your regular household budget. For larger projects, you'll probably
need to borrow money. If you participate in a 401(k) or 403(b) plan at work,
you may be able to get a short-term loan from your account. To find out if this
option is available to you and to learn about any tax implications, talk to
your benefits administrator. Another possibility is borrowing against the cash
value of your life insurance policy. If you're interested in finding out more
about this type of loan, talk to your life insurance agent.
To take out other types of home improvement loans, head to your local
bank, savings and loan, or credit union. Compare interest rates, repayment
options and penalties from lending institutions before deciding on one of the
following options:
Second mortgage: This is a loan against the equity in your
home. It is, in essence, an additional mortgage. Typically, financial
institutions will let you borrow up to 80 percent of the appraised value of
your home, minus the balance on your original mortgage. For example, if your
home is appraised at $100,000 and your current mortgage balance is $70,000, you
may be able to borrow $10,000 by way of a second mortgage. You may also incur
all the fees normally associated with a mortgage - closing costs, title
insurance and processing fees. Talk to your tax advisor about whether the
interest on a second mortgage may be tax-deductible.
Refinancing: This involves paying off your old loan and taking
out a new mortgage on your home. To refinance, generally you'll need to have
equity in your home, a solid credit rating and a steady income. You'll incur
all the closing costs that go along with getting a new mortgage, so unless
you're doing extensive remodeling and can get a mortgage interest rate at least
two points less than you're currently paying, this type of loan may not be for
you.
Home Equity Line of Credit: Like a second mortgage, a home
equity loan lets you tap up to about 80 percent of the appraised value of your
home, minus your current mortgage balance. Since it's set up as a line of
credit, you won't be charged interest until you make a withdrawal, but you will
have to pay closing costs. You can make withdrawals gradually as you start
paying contractors and suppliers. The interest rate charged is usually variable
and may be based on the outstanding balance. Make sure you understand the terms
of the loan. If, for example, your loan stipulates that you need to pay
interest only for the life of the loan, you'll have to pay back the full amount
borrowed at the end of the loan period or you could lose your home. The
interest on home equity loans may be deductible; talk to your tax advisor.
Unsecured Loan: Although the interest rates charged are often
higher and you generally will not be able to get a tax deduction for the
interest paid, the costs of obtaining an unsecured loan are usually lower. The
relative ease of obtaining this type of loan makes it popular for small
projects costing $10,000 or less. The lender will evaluate your application
based on credit history and income.
Be House Smart: You'll be happiest with the outcome of a home improvement project if
you plan carefully and do your homework. Armed with the information in this
pamphlet and a realistic idea of your needs and budget, you'll find your home
getting closer to your dream of perfection.
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Buying
a home may be a dream, but the initial purchase is
only the introduction to that dream. There's always something about your house
that could be a little better, a little closer to perfect. Now, with a little
planning, you can bring
your home closer to your dream of perfection.