How Much Is Too Much … When Planning A New Home … Or Remodeling An Old One?
(HIT) - Conventional wisdom calls for a comprehensive plan when considering any major purchase. When the planned outlay of resources happens to involve the family home, the blueprint sometimes involves life-changing decisions.
Events of the past year, confusing at best for most homeowners, have left many wanting as little to do with mortgages and home improvement financing as possible. Some who were knowingly overcommitted seem to have been rewarded for irresponsibility, and others have seen years of equity disappear into an abyss, with little hope for eventual recovery. What then is the best way to prepare financially for new home ownership, today? How can concerned homeowners commit to necessary repairs or home enhancement projects and still sleep at night?
Here are some practical "meat and potato" considerations to start with:
Financial Inventory:
- Where does the planned project fit in your current financial hierarchy? Is it the most important decision in your life? What kind of sacrifice are you and your family ready to make?
- What is the family debt/earnings ratio?
- Regardless of current banking or home lending criteria, are you ready emotionally to take on the responsibility for the term of this debt?
- Does your project or plan have a backup option?
Target Your Family’s Needs
The "the shoot to kill method" has endured over time as a sound way to get your money’s worth. If you know exactly what you want, why you want it, and how far you are willing to stretch for a good aim, you’re most likely to come home a happy hunter.
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Before you dump another dollar, make certain you know the real cost of planned home improvement projects. |
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Homes slated for improvement— primarily for the purpose of resale—for example, need very specific planning and research. Adding a deck might seem like a great idea to make the home more attractive, but statistically, what are the improvements that home shoppers look for first. Put your dollars where the demand is and you will stand to collect the most for them.
Recent studies find updated kitchen and bath expenditures top the list of return for the dollar.
Scope And Direction
When searching for a first home, or any home at all, bigger isn’t always better. How will the home be used? Is the projected cost of energy over the next twenty or so years consistent with the additional three bedrooms for a two-bedroom family?
Real estate has always been heralded as a good investment. With some diligence and head work, any potential home buyer can make it better. Why not add your own small print to any contract you are considering: I hereby certify that having given due thought and consideration to the commitment put forth in these documents, and this is the course I have freely chosen.
Luxurious Home Improvements
While home improvements are often an expensive nuisance, and may not at all seem like luxuries, consider the larger picture.
You have this home with its quirks and memories. You’ve been paying for it for ages. You know exactly when to expect you will be out from under the mortgage routine.
Chances are you already know the highs and low points of neighborhood attractions and distractions. Then the shower begins to leak and suddenly you are surrounded by the notion that the bathroom is outdated and ugly. And you, the homeowner, are master of the universe. Why not a complete renovation of this room that is so vital to your everyday comfort?
The old tub is too big to get out the narrow door? Tear down the door, or get one of those neat new surround showers without walls. The sky is the limit. Prove it with a lovely skylight or solar panel. Relax in your own steam bath with a walk in closet where use to be an upstairs pantry, now filled with garage sale wannabes.
Finally, remember the first and second rules for painless remodeling: Rule number one–never embark on a home improvement project without a written agreement. Rule number two–always require a copy of the contractor's insurance coverage before the first tool is unloaded.
Get To Know Your Banker.
Nothing is free. And there are no sales that merit the headaches and heartaches resulting from rushing into a hapless decision to move up or on without the financial where-with-all once you get there. Here are some suggestions to start the process.
Work with your financial institution to learn what equity requirements will be needed. Savings even at minimal interest rates can translate into sound financial decisions when applied directly toward the purchase of any real estate or remodeling endeavor.
Consider life-style changes as a resource for the home you have always wanted. Brown-bagging, once a heallthy alternative to drive-thru, can be resurrected as a lost art.
If there are smokers in your family, consider a smoke memorial, rather than a smoke area. Cleaner, fresher, walls mean less work and more enjoyment; and the smoker will have new energy, longer. You might even want to keep track of the extra furnishings made possible by the savings.
With proper planning and orderly maintenance you can keep and maintain your home, take advantage of market nuance when planning a move, You can also get top dollar for many improvements planned to enhance the selling prices of an existing home to help with the purchase of another.
Courtesy: Home Improvement News and Information Center
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