Considering renovations

pic

Buying our dream home is often the beginning. We think that by merely acquiring our home, the hard work is done – after the papers are signed, the bond acquired and our moving in process has worked smoothly. But this is often only the beginning.

One way that things start to become a new mission is when we start deciding on renovations. But we shouldn’t assume all upgrades are necessarily good ones – or that, if we sell, we’ll make our money back on those upgrades.

As Time.com’s section on Money points out:

“Don’t over-improve, [real-estate blogger Michael] Corbett cautions. You likely won’t get your money back in the sale. Simple upgrades—faucets, lighting, cabinet pulls—don’t cost a lot and may be enough to give the house a fresh look.”

Even so, we might still want to improve areas of our home; however, we still need to fund that renovation in ways that make it viable for us to actually get the work done. Today, there are a myriad of options we can take in order to fund ourselves. But we need to be cautious about how we choose. ThisOldHouse.com recommends three cautionary tips:

  1. knowing how much money you need and roughly how much you can get from the start;

  2. narrowing the myriad loan options down to the ones that match your needs and finances; and

  3. concentrating on the lenders that are likeliest to provide the type of loan you want. “

One way to help with your funding is to try a home equity loan. Often known as a second mortgage, they let “homeowners borrow money by leveraging the equity in their homes.” You might wonder why so many use home equity, but there is a key reason they’ve become so popular for consumers. As Investopedia explains:

“The interest rate on a home-equity loan – although higher than that of a first mortgage – is much lower than on credit cards and other consumer loans… Interest paid on a home-equity loan is also tax deductible.”

We need to have the tools to be able to work out these various calculations and have as much information as possible. This is why you should use tools, like a bond repayment calculator, to help have a handle on what your finances and current state of being is – as a consumer and homeowner.

(Image source: Jim Henderson / WikiPedia)