Remodeling season is near so don't suffer from "Project Runaway"
You know that remodeling can add value to a home, but how do you know what rooms are worth remodeling, how much to spend and how to prevent your project from getting out of hand?
First, think about design and function, and distinguish between your wants and your needs — do you want to refresh your space to help you sell your home or do you want to create your dream room in the house you’re thinking of buying? Your goals for the project will set the parameters of your budget.
Room size, floor plan, product choices and amount of required labor affect the cost of a project. Kitchens, for example, can range from $5,000 to $50,000. The National Association of the Remodeling Industry recommends saving 10 percent to 20 percent of your budget for unforeseen costs. Be ready to make compromises here and there and plan to do some of the work yourself if you’re hoping to keep costs down.
There are various ways to finance a remodeling project, and many professional remodeling contractors are familiar with available financing options. Be sure to research funding sources carefully and compare qualification guidelines, interest rates, terms and tax considerations.
Finally, make sure you have a thorough and clearly written contract. It should include specific details about what the contractor will and will not do; a detailed list of materials for the project; approximate start and completion dates; total price, payment schedule and cancellation policy; and a minimum one-year warranty.Sources: Kitchens.com; National Association of the Remodeling Industry (www.nari.org)
Ways to Prepare for Homeownership
1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income. 2. Develop your home wish list. Then, prioritize the features on your list.3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price. 5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.
6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you. 7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.
8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.
9. Calculate the costs of homeownership. Use the Mortgage Calculator button above to estimate your homeownership costs.This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable. 10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.
Rocco Calarco, ABR, CRS, ePROAssociate Broker
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