Ok you have decided to remodel parts of your home – creating that dream kitchen or bathroom is very exciting however paying for the remodel is an important concern that you have to look at. Here are some tips for your financial plan for major remodeling to consider:
1- Get everything in writing before you make any decision. It‘s vital for you to nail down the payment terms and be vigilant in enforcing them. A good contractor will work with you towards a reasonable payment plan that includes a fair amount for a down payment and payments that are tied to the progress of the work. If you can negotiate a provision in your contract that allows you to withhold a final segment of your last payment until you are completely satisfied with the job.
2- Financing options – if you cannot pay for the remodel up front there are a few options you can look at. Look into a home equity line of credit, home equity loan or cash-out refinance.
A home equity line of credit is a revolving line of credit – sort of like a credit card that typically requires at least 20 percent equity. A home equity loan or second mortgage is usually a fixed rate and fixed term loan based on the equity in your home and paid in monthly installments.
Cash-out refinancing is the refinancing of your existing mortgage loan. This is a loan for a larger amount than your current loan, and the homeowner gets the difference in cash.
You should shop around for the best terms. It is not necessary to go with the bank that holds your primary loan.
And please, if financing, be quite certain that you can easily afford the extra payments. One of the factors that really fueled the last big fall of real estate prices was people over leveraging themselves.
3- Factor a 10 percent buffer zone for unexpected costs – always expect the unexpected. Having a contingency budget is advised as it will save you many headaches that come with additional costs.
Remember home improvements that enhance your home living experience, may raise the value of your home when it comes time to sell, but, sometimes, not by as much as you spent. You’ll want to make sure that you will enjoy the improvements enough to justify the cost, especially if your design choices are not neutral. I remember seeing a bathroom remodel that had over $50,000 in Italian Marble that had a very unusual design. The owner who had it installed loved it, and pretty much no one else did. When he went to sell, instead of buyers appreciating the expensive upgrade, they all thought about how much money they were going to have to spend to get rid of it and put something else in its place.
Finally, when looking for contractors, it is very important to get recommendations. Contact your Realtor – we always have lists of contractors that are reliable and trustworthy. If the work to be done is going to cost $500 or more (total of labor and materials) Nevada requires (for your protection) that you hire a licensed contractor.
I know, I know… licensed contractors cost more money, right? Or do they just charge more? What I mean is if you hire an unlicensed contractor and they get hurt on your property, your insurance does not cover that accident – also if you are not satisfied with their work or they run away with your deposit, you will not have much recourse.
Are you ready to buy or sell a home? Do you have a need for commercial / industrial / retail space? We can help you with that… just call us at 702 SELL NOW or click on this link to my website
Choose to have an amazing day…..Jeff