|
|||||
| News | Education | Answers | Forum | CreditBloggers | Status | |||||
Remodeling Your HomeUsing your home equity to invest in home improvements or remodeling can be a smart move. However, there are some things that you should know before you start and some costly pitfalls to avoid along the way. 1. Choose your improvements wiselyRemodeling your home can be a very expensive proposition. The average kitchen remodel adds up to a whopping $44,000. It's important to consider your return on investment before you start tearing up the carpet. Some improvements add significant value to home while others are relative duds. Before you start a remodeling project, take a look at home listings in your neighborhood. Which homes are being sold for the highest amounts? What features set these homes apart? Talk to a real estate agent about what would add the most value to your home. Also consider how much a home improvement will boost your comfort and how long you plan to stay in the home. In general, minor kitchen remodeling, siding improvement, adding a second story, and minor bathroom remodeling are the projects where you are most likely to earn back your investment. Adding a swimming pool, remodeling an office, and adding a sunroom are the least valuable home investments. Visit Remodeling Magazine online for more reports on remodeling costs compared to values. 2. Get an estimateSticker shock is pretty common when it comes to home remodeling projects. Paying $10,000 to $70,000 for remodeling one room is pretty standard. Before you start investigating home equity loans or lines of credit, schedule appointments with local contractors and architects to get an idea of how much your project will cost, which permits are required, and how much work will be involved. Online home improvement cost calculators can give you a general idea of costs, but only professionals in your area can give you a true estimate. You should obtain multiple estimates from different contractors and architects since prices can vary. Look for contractors who are licensed, bonded, and have workmen's compensation insurance and liability insurance. 3. Choose your financingYou've picked the project and selected a contractor …now it's time to get started on financing your remodel. There are several different options you can choose for coming up with the funds needed for a major renovation. Here is a list of the most popular options:
There are other financing options available beyond these four popular choices. For small projects, you could use a credit card to manage the costs. Choose a card with a high credit limit and a low interest rate for this type of project. You can also decide to pay for the remodeling project using money you have saved. Paying for the project this way will help you avoid interest costs, liens on your home, and expensive fees. Just make sure that you still have enough money saved for the entire project. 4. Manage the projectIt is easy to let costs get out of hand when you are remodeling. Being a strict project manager can help you keep your remodeling costs within your budget. Original remodeling estimates are rarely perfect. Expect that your costs will be about 10% higher or lower than expected and save some extra money accordingly. During the remodel, closely watch your costs and your loans to make sure that you are not overextending yourself financially. Avoid making changes to your remodel after the project has already started. Late changes can cause delays and extra costs. Keep in close communication with your contractor to make sure the project is completed without a hitch! |
|