Category: Home Improvement

Tips On Home Renovation

What is a home-renovation loan?

A home-renovation loan is a type of loan, often wrapped into a mortgage loan, that includes the costs of renovating a “fixer-upper.”

You might consider getting one if you’re interested in buying a home at a lower price point and taking on the costs of fixing it up. Buyers choose to do this for a number of reasons, including personal pleasure or as a way to gain equity faster than they normally would when buying a move-in ready house, since you’re more in control of establishing the value of your house.

Home-renovation loans may cover costs such as installing or updating heating and cooling systems, energy improvements, roofing, waterproofing, mold remediation, etc., in addition to desired renovations like a new kitchen or bathroom that could add value to the house.

In many cases, an appraisal for a home-renovation loan will include up to 110% of the home’s after-improved value. This is particularly helpful if the home is in need of deferred maintenance, such as a hot water heater with one to two years of life left in it.

 

Remodel loan pitfalls to watch out for

In deciding whether to seek a loan, one financial issue is whether–and if so, how much–the renovations would increase the home’s value. Some projects may increase the value beyond their cost. But with others, you may not get back the cost of remodeling when you sell; some projects simply aren’t worth doing from a cost standpoint, although you may want to do them anyway because it improves your lifestyle. Think: Adding that in-law suite or extra bedroom.

When weighing renovations from a return standpoint, it’s a good idea to pay attention to the total amount you’d have in the home after finishing the work, relative to an appraiser’s estimate of the total after-project value.

You also want to consider the values of comparable homes in the neighborhood that have sold recently. A major pitfall lies in investing more in a home, through the purchase price and remodeling, than the values of these comparable homes, as they’ll affect your eventual sale price.

 

Should you get a home improvement loan? Here are  core things to consider:

Combine saved cash with your home renovation loan

Consider combining cash with any of the other financing options. This may considerably reduce the total amount of interest you pay.

How to finance home improvements with your credit cards

Use a credit card to pay for your home improvement. Keep in mind details such as the possible rewards you could get on one side, and paying monthly charges in full and on time to avoid paying interest and/or late charges. For those small projects, only use zero (0%) or low interest credit cards when cash is not available. You may find 0% interest offers on new credit cards attractive, for projects under $15,000 (like that bathroom remodel), mostly because you plan to pay off the amount balance in a short period of time (12 to 18 months). The credit application and approval process is quite simple and there is no equity risk on your dwelling on this unsecured type of financing. Be aware, you need to understand the terms and fees of these credit card offers, especially that you are capable of paying off the full balance before the offer expires to avoid higher interest rates.

Should I refinance my mortgage and cash it out as a home renovation loan?

Another option may be a first mortgage cash-out refinancing. Be aware that the closing costs will often be substantially higher than those related to Home Equity products. Make sure you estimate the cost of your home improvement and the time it takes to pay off the loan. Home Equity products may save money on projects over a shorter period than a cash-out first mortgage. Always consider financing the projects that improve the value of your home. Look for information on which improvements or upgrades will boost property value in your area and never finance a major improvement if it increases the value of your property out of the comparable market.

Difference between a Home Equity Loan and a Home Equity Line of Credit:

A home equity loan, gives you money all at once, while a home equity credit line provides a source of funds that you can draw on as needed. These may be more suitable for the higher end of a mid-range size project. You should consider cost of financing and collateral risks vs. urgency and timeliness before choosing which one suits you best.

 

Consider one of six ways to pay for your home remodeling project:

  1. Cash.

If you’ve got it, use it. For those with the available funds, this choice will be the most obvious. If you plan to save and pay for each upgrade, try tackling one small project at a time. Using a credit card is also a possibility for a smaller home reno, as long as you’re able to pay that amount back before it accrues high interest.

  1. Mortgage refinance.

Refinancing your mortgage could give you access to a lower mortgage interest rate that yields a lower monthly payment. That’s why we always recommend a yearly check-in with your loan officer to keep your mortgage — and your finances — in optimal shape. Lowering your monthly mortgage payment with a refinance could free up extra cash that you could use to pay for your home renovation, as described in option number one. Your loan officer may also recommend a cash-out refinance that will allow you to access some of your home’s equity at up to 80 percent of its value.

  1. Home renovation loan.

This option works if you’re a homebuyer who plans to renovate as soon as you get the keys to your new house. Renovation lending programs like the FHA 203(K) Limited or Full or FNMA Homestyle (Conventional) loans allow you to borrow extra money, within one home loan, to fund a home purchase and its improvements. A home renovation loan can also be used to finance repairs. Each renovation loan product has different contingencies, maximum repair amounts, and timelines that can be explained in detail by your loan officer. The FHA 203(K) Limited, for example, requires home repairs to begin within 15 days and to be finished within six months of closing.

  1. Home equity line of credit (HELOC).

A home equity line of credit is taken out as a revolving credit line, using your home’s value as collateral. Similar to a credit card, a HELOC offers a line of credit that you can use to fund larger repairs or consolidate other loan debts. The interest on a home equity line of credit is normally tax-deductible and lower than other loan types. And like other mortgage loans, a HELOC could leave your house at risk if payments are delayed or stopped altogether.

  1. Home equity loan.

A home equity loan differs from a home equity line of credit in that it’s a second home loan used to access your home’s equity, without needing to refinance. A home equity loan may be a better option than a refinance if you have a large amount of equity available to you. The main difference between a home equity loan and a cash-out refinance is that the former creates a second mortgage on your home, while the latter converts your existing mortgage into another mortgage with different and more competitive terms. You may choose not to refinance your first mortgage if it already has a low interest rate. In this scenario, taking out a second mortgage makes more sense.

  1. Construction loan.

This final option can work well if you’re a homeowner bringing out the big guns — rebuilding a portion of your house or doing a total flip. Construction loans are harder to come by and have more stringent requirements. In most cases, a construction loan is granted as a short-term loan, and money is released in stages until the renovation is finished.

 

Alternatives to a Home Renovation Loan

If you have very healthy credit and a less expensive project in mind, you can use a credit card with a promotional no-interest period as an alternative to a full renovation loan. Isolating your project costs on a separate credit card will make it easier to keep those expenses separate from your usual spending, while a no-interest offer will minimize the cost of borrowing the money. Just remember that it can be easy to overspend with a credit card, so make sure you’re confident you can use it responsibly and repay the balance quickly.

There’s also the cash-out refinancing option, which involves refinancing your current mortgage at a higher loan amount and using the extra cash for a renovation. This choice might make sense if you have at least 20% equity in the home, a good credit score and low interest rate options available in the market. Look carefully at current rates, lenders, and how much equity you have in your home before choosing to refinance.

The best choice for you will vary significantly depending on your situation. If you want to make home repairs on your new home right away, the lower rates and closing costs of a home renovation loan make the most sense. If you’ve already built up some equity in your home, you can take advantage of a strong market with a home equity loan to increase the value of your home. Credit lines or cash-out refinancing are worthwhile considerations when interest rates are low and your credit is healthy.

Easy Ways To Find Finance For Your Home Renovation

Pro Tips on How to Hire a Contractor

Get Recommendations

Start with your friends and family and then check in with the National Association of the Remodeling Industry for a list of members in your area. You can also talk with a building inspector, who’ll know which home renovation contractors routinely meet code requirements, says This Old House general contractor Tom Silva, or pay a visit to your local lumberyard, which sees contractors regularly and knows which ones buy quality materials and pay their bills on time

Do Phone Interviews

Once you’ve assembled a list, Tom recommends that you make a quick call to each of your prospects and go through these questions to ask a contractor

Meet Face to Face

Based on the phone interviews, pick three or four contractors to meet for estimates and further discussion. A contractor should be able to answer your questions satisfactorily and in a manner that puts you at ease. Tom says that it’s crucial that you two communicate well because this person will be in your home for hours at a time. On the other hand, don’t let personality fool you. Check in with your state’s consumer protection agency and your local Better Business Bureau before you hire a contractor to make sure they don’t have a history of disputes with clients or subcontractors.

Investigate the Facts

Now that you’ve narrowed your list, put your research to use. Call up former clients to find how their project went and ask to see the finished product. But Tom says you shouldn’t rely on results alone. Even more important, visit a current job site and see for yourself how the contractor works. Is the job site neat and safe? Are workers courteous and careful with the homeowner’s property?

Make Plans, Get Bids

You have your short list of contractors whose track records seem clean and whose work ethic looks responsible. Now it’s time to stop looking back at past work and start looking forward to your project. A conscientious contractor will want not only a complete set of blueprints but also a sense of what homeowners want out of a project and what they plan to spend. To compare bids, ask everyone to break down the cost of materials, labor, profit margins and other expenses. Generally materials account for 40 percent of the total cost; the rest covers overhead and the typical profit margin, which is 15 to 20 percent

 

Tips for Budgeting for a Home Renovation

Whether you plan to renovate a house before moving in or are preparing to remodel your current abode, we know budgeting for a home renovation can be a tough process. First, you’ll need to determine what it is you really need versus what you simply want. Next, you’ll have to figure out how you’re going to finance the renovation in the first place. Once you have a general idea of how much money you have to spend on renovations (and where that money is coming from), you should be able to make better decisions on finishes, appliances and other renovation features

Remember: most renovations end up costing more than originally thought, so be sure to have a money cushion set aside in case of emergencies. This is especially true if you plan to tear down walls and make structural changes, as these projects often end up with unwelcome surprises (think: water damage, mold or electrical and wiring issues). Many homeowners may also be concerned with ways to cut costs and save money without compromising the quality of the home. For tips on budgeting for a home renovation, check out our expert advice below

Decide on your top renovation needs and priorities

The reason for renovating your home probably has something to do with a need that isn’t being met by your current living situation. Perhaps it’s a need for more space or perhaps it’s a need for an updated bathroom. Whatever the reason (or reasons) for renovating, be sure to write down and prioritize all of your remodeling goals. For instance, a larger kitchen island may be at the top of your priority list, whereas updated appliances may be lower down on the list of needs. Keep your goals in mind and avoid getting side-tracked with smaller projects that can wait for later

Look at cost vs. value for each renovation project

Planning to sell your home in the future? Keep the return on investment top of mind when choosing home renovation projects. After all, there’s no reason to pour $40K into a kitchen, if the home isn’t going to sell for more than you originally paid. Once you’ve prioritized your home renovation needs, research each project’s cost vs. value using Remodeling Magazine’s latest Cost vs. Value report. The report includes the cost of common remodeling projects and compares them to that project’s resale value. This should give you an idea about which projects are worth the money and which projects aren’t. For instance, the 6 most valuable home improvement projects of 2018 included an upscale garage door replacement, manufactured stone veneer, the kitchen, siding and vinyl window replacements and a bathroom remodel.

Figure out how you’re going to finance the renovation

Now for the hard part: figuring out how exactly you’re going to finance this renovation. First, take a look at your current finances. Do you have enough cash to cover the renovation? If so, great. If not, you’ll need to borrow money for the project. Unless you have a fairy godmother willing to loan you cash, we recommend either using a home equity loan or home equity line of credit (HELOC), where homeowners can borrow money against their home. Many homeowners also use credit cards to finance their renovation projects. This may be a good idea – assuming you have a plan to pay these credit cards off. If you have strong credit, you may also be able to obtain a loan through SoFi, an online personal finance company providing personal loans and mortgages to high income individuals

 

How to Find a Contractor When Renovating a Home

Preparing to renovate your home? Whether it’s a small, one-room makeover or an entire overhaul of the property, you’ll likely need an experienced and reputable general contractor. While expensive, these construction professionals provide valuable services to homeowners renovating a home. In all likelihood, homeowners won’t be able to spend all day, every day at the home overseeing the day-to-day operations. That’s where a general contractor comes in. Not only do general contractors oversee every aspect of the renovation from beginning to end, but they also guide homeowners in making practical yet budget-conscious decisions throughout the process. In addition, they handle complicated inspection and permitting requirements by the city.

Ask your Realtor

Did you purchase the home using a trusted real estate agent? If so, don’t hesitate to ask your Realtor for contractor suggestions. Most Realtors have a list of home improvement professionals to meet their customers’ real estate needs. For instance, in addition to recommended contractors, your Realtor likely has a list of handymen, plumbers, pool cleaners, etc. It’s also likely that a seasoned and experienced Realtor has worked with contractors in the past – either by selling them homes or selling their flipped homes. If you haven’t yet purchased the home that you plan to renovate, we recommend asking your Realtor to have their recommended contractors come to the house for a walk-through. The contractor may be able to give you a rough estimate of renovation costs, which could help you decide whether or not the home purchase is worth your money.

Word of mouth

When searching for a general contractor, there’s nothing more helpful than a good or bad recommendation from a trusted friend, family member or neighbor. If the contact had a good experience with the general contractor, you can bet they’ll be singing their praises. However, if the experience was less than favorable, your contact will likely warn you against hiring a certain contractor. Word of mouth recommendations are valuable, so don’t hesitate to reach out to anyone and everyone you know in the area who has undergone a home renovation. You may also want to consider joining Nextdoor.com or local Facebook groups to obtain contractor recommendations from locals

Search digital marketplaces

If suggestions from your Realtor and word of mouth recommendations from friends aren’t enough, try searching a digital marketplace that connects homeowners with home improvement contractors. A few websites to explore include Houzz, HomeAdvisor, Angie’s List and Porch. These websites provide visitors with a list of local contractors. If the contractor has set up a profile with the site, you’ll likely be able to find information about the company, photos of projects and reviews from clients

Obtain recommendations and conduct research on local contractors

Just because a trusted friend vouches for a contractor doesn’t mean you shouldn’t do your due diligence. Make sure you’ve checked to see whether the contractor is properly licensed and insured. Check customer reviews and Better Business Bureau ratings. It’s also a good idea to research how long they’ve been in business, years of experience and projects completed. In addition to reviews available online, we recommend asking the contractor for a list of client references.

 

How do I find a good construction contractor for a home renovation project?

For most homeowners, the hardest part of any home renovation project isn’t the work itself, it’s finding a competent and reliable contractor to do the job. Installing kitchen cabinets, knocking down a wall or retiling the bathroom is simple compared with the struggle of hiring a quality contractor who will perform at a high level from start to finish. Everyone has heard stories about horrendous contractors who tore apart the kitchen and never returned or projects that cost three times the contractor’s original estimate.

Choosing the right contractor can make the difference between a successful home renovation project and a disaster. But even for experienced renovators, finding the right contractor can be a challenge. Apnabuilder is a reliable construction company in Pakistan (Lahore) that focuses on your needs. You can take on any construction project with confidence while our team does the heavy lifting for you.

Whether you are in Pakistan or abroad we will make the construction of your project a breeze. From the conception of an idea to the realization of your dream, our team will be right there for you at every step of the process. Construction processes can be tedious. Purchase of land, developing blueprints, designing, buying construction materials, managing labor and completing the project in time. But with our building construction company services you can enjoy your morning coffee while our team will build your dream to perfection.

Know what you want before you get estimates: “Start with a plan and some ideas,” Hicks says. “Don’t start by talking to contractors.” You’ll get a more accurate estimate if you can be very specific in what you want done and the materials you would like to use to make it happen.

Ask friends, relatives and co-workers for references: People in your neighborhood who have done similar projects are your best sources. If you know people in the building trades, ask them, too. Employees of local hardware stores may also be able to provide referrals

 

Tips For Finding Reliable Home Renovation Contractors

Ask For Referrals

Websites that offer referrals for contractors can be a great tool if you don’t know where to find someone for the job, but also be wary. A contractor can have seemingly stellar reviews, but unless you’ve seen jobs they’ve completed in the past and spoken to people who have worked with the contractor before, you shouldn’t trust everything you find online as your only source. Experienced contractors don’t need website referrals; they’ll have real contacts for you to contact who can attest to their integrity

Seek Out Active Communicators

Communication will play an important role in the renovation process, so look for someone you can get along with. Problems and challenges can arise at any point of a home renovation project, and when they do, you and your contractor should be able to communicate and work through the issue together. Choose a contractor that seems able to remain calm and also keep you calm while finding a solution to any  problems.

Look For Solid Contractor-Homeowner Contracts

There is no way around having a contract between you and your contractor; it’s part of their job description. If a contractor is not willing to write up a contract for your job or if the contract is incomplete, then it is likely unwise to proceed with the home renovation project with that contractor.

Don’t Fall For Free Quotes

When a contractor offers you a quote, they’re giving you a breakdown of costs for the project at hand. Even though it may seem like a positive thing for a home renovation contractor to offer a quote for free, it can also be a negative sign. The best contractors typically charge for quotes because they are busy with their jobs. If contractors taking the time to look at your home and discuss the project with you, it usually means that they are serious about working on your home. If you are paying for the quote, it usually indicates that you’re serious about getting the job done. One way to find contractors who are more likely to do a good job on your home renovation project is to be skeptical of those offering free quotes

Look For Contractors Giving Realistic Cost Estimates

Quotes are necessary, but they probably won’t give you all of the information you’ll need in order to properly choose a contractor. Before you hire someone, you’ll need to pay for a detailed estimate. This estimate should contain every aspect of the project, including specific materials and required permits. Proper estimates are pages-long and should answer every question you have about the renovation — even ones you didn’t necessarily think of. Be cautious about proceeding with the contract if a contractor tries to give you an insufficient estimate and you can spot price discrepancies or a lot of missing information

Doing Home Renovation For A Better Home

Tips to Renovate your House Beautifully yet Economically

Divide and Conquer

As mentioned earlier effective planning is the key to effective renovation. If you are renovating yourself then you need to focus on both the bigger picture and the smaller parts. You might have heard the phrase “whole is greater than the sum of its parts”, you can apply the same strategy to your home renovation project and devise a renovation plan for each area in your house. If you hire an architect for renovation, he will assess your requirements and then renovate accordingly. In this case since you’re in charge, you will brainstorm your requirements, write your end goal for each space in the house and decide the overall goal, and then move on to.

Budgeting

Since you want to renovate your house economically it is important for you to decide the total expenditure requirements/limit. It is important to remember in budgeting that you cannot overestimate your budget, keep your budget underestimated and then move on to researching for things you need.

Research

You will be surprised at the number of options you have once you start your research. The beautiful lamp that you liked at a high end store can be purchased at a lower price from elsewhere as well. So, when renovating your house on budget please remember that if you research to find the furniture you like, paint you want or the decorations you would like in your house, you are likely to find most of the supplies at an inexpensive price. Take advantage of online shopping, thrift stores and second hand furniture shops and see how far you will go. For step by step instructions on how you can decorate your house beautifully yet economically please read below.

Paint Affects Lighting

As mentioned earlier painting affects lighting and when renovating your house you might opt for a new paint. In that case if you are already on a budget purchasing different colored pallets might seem counterintuitive. If you are on a tight budget then opt for a black and white palette, it will give your house a modern sophisticated look and you will have the guarantee that you can never go wrong with white or black.

Small Rooms don’t have to Look Small

If you are renovating to make a small house look bigger than an inexpensive and beautiful way of achieving that goal is to use mirrors. It’s an inexpensive technique but it’s used by one of the most famous architects of his time, Sir John Soane, who used mirrors in the breakfast room of his London house.

 

Tips for Planning a Successful House Remodel

Know Your End Goal

Before you decide how extensively to renovate, you need to know what your end goal is for your home. Are you renovating to raise the resale value of your home, or will you be staying put for years to come? Consider the condition of your neighborhood before you begin, and know which renovations are a good return on investment, and which will be considered overdoing it for the area. Having a specific plan in place for your future will help you decide how deep to go with your project.

Have a Budget

Knowing your budget—and sticking to it—is one of the most important parts of renovation planning. Remember to add in a contingency fund for any unexpected costs—and expect to use it—as well as incidental costs like the cost of eating out for a kitchen reno, or even taking a hotel for a night or two. It can be easy to want a top-of-the-line renovation, but perhaps all you need are some cheap upgrades which will make your house look more expensive. Do your research and plan your budget before ever lifting a hammer.

Consult the Calendar

If you’re hoping for a brand new home for a particular event or holiday, make sure you look at your end date and work your way backward. Be sure to pencil in a few weeks to a month at the end for wiggle-room in case there are delays on the way to avoid disappointment.

Do Your Research

Take the time to chat with friends, family, and neighbors about the renovation work they have done, and the challenges they have faced during the process. Having a wealth of information from homeowners who have been in your shoes can be invaluable in the planning process, and this information may alter your end plan.

Know Your Limits

DIY renos are a great way to save money, have a sense of accomplishment, and involve the entire family, but they can turn disastrous if you don’t know what you’re doing. Know which tasks you can safely tackle, and which should be handled like the pros, like a potentially load-bearing wall, asbestos or lead paint.

 

Tips for a Successful Remodeling Project

Plan Ahead

Making product selections early can prevent delays later. Proper planning can also help keep you on budget. “You’ll end up making the same decisions, but you’ll know what they’re going to be and what they’re going to cost ahead of time,” explains Ridley Wills, founder of The Wills Co., a design-build firm in Nashville.

Remember the Big Picture

Long-term-maintenance, energy-loss, and repair expenses can add up quickly. Make sure you include them in your calculations when comparing prices.

Find Good Help

Hire remodelers who have more than three years of experience, membership in the National Association of the Remodeling Industry (NARI), a good record with the Better Business Bureau, and positive customer references. Most important, select a remodeler you trust.

Visit a Job Site

When evaluating remodelers, make sure you visit their current job sites. The best remodelers maintain clean and organized work sites, take precautionary measures to ensure safety, and know how to keep a low profile in a neighborhood.

Be a Good Boss

The most important thing you can do during a remodeling project, other than write checks, is treat your remodeler well. “The perfect clients are easy to get along with, honest, and have an appreciation for what we do,” says Anthony Wilder, founder of Anthony Wilder Design/Build in Bethesda, Maryland.

 

the Biggest Design Mistakes New Homeowners Make

Starting renovations too soon

If possible, live in your house for a while before making any plans to overhaul. “Learn its flow, where the groceries land, where the laundry wants to go, how the sun hits it, where the choke points are, which way the rain slants, even get a sense of its soul,” says Bruce Irving, an independent renovation consultant and real estate agent from Cambridge, Massachusetts. “All of this will inform your choices when you make your plans to change things.”

Underestimating costs

Most jobs will cost more and take longer than you expect, so always add 20 percent to what you think a project will total when budgeting “If you don’t have the funds,” cautions Irving, “cut the job back. If you happen to beat these projections, then your surprises are happy ones.”

Expecting everything to go according to plan

Work on older buildings can yield a lot of unforeseen events. Who knows what’s behind that wall you’re opening up? New construction is more controlled, but that doesn’t always mean smooth sailing. Be prepared for the unexpected. “It’s a human failing,” says Irving. “We all hope and pray everything goes according to plan.” Trust us: Nothing will.

Not hiring a designer from the start

“You are about to spend more than you ever thought possible,” says Irving. “It might as well be for a correctly-designed thing.” Interiors designers and architects typically either charge by the hour or take a percentage of the overall job (say, 10 percent)—a small sum compared your total payout.

Going for the lowest bid

“Good professional help is worth the money,” says Irving. “That means design as well as construction.” Be willing to pay for a good contractor, and be wary of the one who’s cheap and available right away.

 

Creative home renovation tips for a family with a tight budget

Install some new lighting

Lighting is another factor that contributes a lot to the ambiance of a room. Lucky for you, lighting is also a very affordable factor to change. You can opt for a brighter or dimmer setting depending on how you want the room to feel.

Colour is another option when it comes to changing the lighting in a room. Small colour accents can help give a room a cooler or warmer feel depending on the shade.

Add minimalist storage ideas

Storage is an issue in most households. Not only do you have too many things to store, but storing them in a nice way is important as well. This is when investing in some minimalistic storage is a good idea. Small cubby holes and hanging racks are a few great ideas to make storing clothing and other smaller things a breeze. These storage devices can be added to closets and empty spaces throughout the house.

Hang up homemade art or photos

Many homeowners scratch their heads when considering what to do with a large area of empty wall. Instead of investing in expensive mirrors or other accessories, consider hanging some of your own work. This could come in the form of a personal painting or photograph. It’s a great way to make your rooms feel more personalised while also saving money in the long run.

Replace cheaper household accessories

When considering a remodel, our attention typically turns towards the bigger ticket items. However, even swapping out smaller household accessories can help to shake things up. For example, pillows are littered throughout most homes on couches, beds, and chairs. Changing the smaller accessories throughout your home is a great way to renovate with a tight budget.

Rearrange your furniture

While furniture contributes a lot to the overall feel of a room, it also tends to cost a lot of money. Most of the time, a tight budget won’t allow for the purchase of a new couch or dresser. For this reason, it is important to utilise the power of rearrangement. A room can feel completely different even with the same furniture when it has been moved around to different spots. You can do this with furniture from other rooms as well. This essentially costs nothing, yet can bring the feel of a complete remodel.