Remodeling
Projects:
Which
Ones Build Your Home Equity Most?
(ARA) - Can't bear another
day with pea green countertops? Does your rust-colored carpet make you
cringe? If your home's interior looks like the set of "Three's
Company," or if you're just ready for a change, now may be the perfect
time to renovate. The right remodeling project can enhance the livability
and value of your home, but which ones will give you the most bang for your
buck?
The Eyes of the Beholder
Although your personal tastes
should factor into the project you choose, you also may also want to take
into account what a possible buyer might like. Don't worry, mind-reading
isn't necessary. According to Remodeling Online's 2000-2001 Cost vs. Value
Report, kitchen and bath remodels, along with second-story, bathroom and
family room additions, recoup most of your costs when a home is sold.
Other improvements you might
consider include:
- Energy efficiency - With
energy bills going sky-high, a new furnace that updates your home's energy
efficiency can lower your energy bills, as well as appeal to buyers.
Consider a new heating and cooling system, new windows or added insulation.
- Landscaping - Shrubs, rock
gardens and retaining walls can enhance the beauty of your home's exterior
and increase curb appeal when it's time to sell. Properly placed trees can
block wind and lower heating costs.
Visiting model homes is
another good way to predict what amenities future buyers might appreciate
and find ideas that you might appreciate. Tour open houses around your
neighborhood, too. Besides getting free cookies, you'll get a chance to see
how your home compares with others that a potential buyer might visit.
Hammer Time
So you've decided on a
project, now where to begin? If your project is complicated, you will
probably want to start by hiring a contractor. The Better Business Bureau
recommends getting bids from at least two or three contractors using the
same specifications. Ask for local references and try to visit one of their
completed projects. Verify that the contractor has insurance to cover
worker's compensation, property damage and personal liability in case of
accidents. Also, make sure the contractor is bonded and licensed if your
city requires it.
Financing Your Fix Up
A strong housing market has
made it easier to finance home improvements. Rising home values can mean
increased home equity for people who have owned their homes for several
years. Equity is the difference between what your home is worth and how much
you owe on your mortgage and any other liens on the home. Home equity loans
let you borrow against that value for a variety of uses, including home
improvement projects.
Home equity loans are
available at fixed rates with average terms up to 15 years. These loans
usually have lower interest rates than credit cards, which may mean lower
payments and more savings for you. Best of all, the interest on home equity
loans may be tax deductible. (Be sure to talk to your tax advisor.)
A home equity line of credit
may be a good option if you won't be doing all your renovations at one time.
With a line of credit, you are given a credit limit that you can borrow
against as you need it. Rates are usually adjustable with flexible repayment
terms.
Now that interest rates are
down, it may be a smart time to think about remodeling. Home improvements
may make your home more comfortable, energy-efficient and increase its
value.
Jim Larranaga is Executive
Vice President of Priority Publications, a Minneapolis-based publisher of
financial newsletters.
Courtesy of ARA Content,
www.aracontent.com, e-mail:
info@aracontent.com
