Ready to Move? Consider
Remodeling Instead
(ARA) - Is your home feeling a little squeezed or
out-of-date? You may want to join the millions of Americans
who are turning to professional contractors instead of
Realtors.
According to the National Association of the Remodeling
Industry (NARI), home remodeling may be preferable to moving.
Remodeling can be less expensive -- the process of selling a
home and moving can cost up to 10 percent of the value of your
current home. Remodeling also enables your family to stay in a
familiar neighborhood and school district. And though it can
be stressful, remodeling is much easier than moving a
household.
In addition, remodeling allows you to customize
improvements based on your individual needs and lifestyle.
There are many reasons people choose to remodel. You may wish
to add more space, upgrade cabinets and countertops, or
improve energy efficiency with new windows, doors and climate
control systems.
Remodeling and increased home values
Remodeling can also increase the value of a home. However,
a home's value may not increase as much as you might have
expected. In some cases, you may not even recover the costs of
the renovation.
The Remodelers' Council, a part of the National Home
Builders' Association, suggests remodeling projects that bring
the value of your home up to the value of your neighbors'
homes. A good rule of thumb is to keep the total of the value
of your home before remodeling and the value of the remodeling
projects to within 10 percent to 15 percent above median sales
prices for a home in your neighborhood. Avoid projects that
make your home the most expensive in your neighborhood or
different from the other homes, such as a large outdoor
swimming pool.
Experts agree that kitchen and bath remodeling projects are
the most likely to allow you to recoup their investments,
possibly because homebuyers expect to spend a great deal of
time in these areas of the house.
If increasing your home's value is a key priority, keep in
mind that your keenest competition at resale will be new
homes. So get a sense of what these buyers want by looking at
the features and amenities found in new homes, such as great
rooms and high ceilings.
Financing your remodeling project: more options than ever
Once you have decided on the remodeling project, it's time
to obtain financing. With today's low interest rates and
climbing home prices, homeowners have greater opportunity to
borrow against their equity. They also face more choices for
accessing equity, because lenders are offering greater options
than ever before.
A key decision is choosing between a home equity loan or a
line of credit. Although both borrow against the equity in
your home, there are differences between them. A home equity
loan is given as a lump sum and under preset terms is repaid
over a fixed period of time, generally 15 years.
A revolving home equity line of credit, on the other hand,
provides a credit limit or line, which you can draw on as
needed, making regular payments. As you make payments, you can
continue to borrow against the credit line during the draw
period. Many homeowners enjoy the flexibility of a line of
credit. To determine which option is best for you, sit down
with your lender or financial planner.
Some lenders, such as Bank of America, the largest home
equity lender in the United States, are introducing features
to make the process more convenient for customers.
New access options -- Card access, such as the Bank of
America Equity CreditLine Visa, which directly accesses a home
equity line of credit, is growing in popularity. Sandra
Endsley, product manager, Equity CreditLine Visa, said that
individuals reported in research that they enjoy the
convenience of using a card without having to then write a
check to transfer the charge. Although it can be carried in a
wallet, the card has a distinctive design to distinguish it
from other bank cards.
Cards that access a home equity line of credit benefit from
low rates, payment schedules and possible tax advantages of
the home equity line. (Potential borrowers should consult with
their tax advisors regarding the deductibility of interest and
charges for the line.) Whether you're accessing the account
through a check or card, the account is still a home equity
line of credit and subject to the same terms and conditions.
In addition, the Equity CreditLine Visa offers the same
security features as other Bank of America cards, including
zero liability from fraudulent use when the customer notifies
the bank as soon as possible after a card has been lost or
stolen, and a Photo Security option.
Line of credit lock-in options - While a home equity loan
is commonly available at a fixed rate, lines of credit
typically are offered at variable rates tied to the prime
rate. Variable rates have been popular recently because of low
interest rates. However, as rates climb, the interest rate on
a variable loan will increase.
Because many customers prefer the predictability of a fixed
rate, many lenders now offer a lock-in option for
already-advanced portions of home equity lines of credit.
Primary mortgage tie-in options -- Many new homeowners want
to make improvements or enhancements to their homes right
away. Lenders such as Bank of America often offer qualified
customers the opportunity to secure a home equity line of
credit when they close on a primary mortgage.
Technology process improvements -- Because of breakthroughs
in technology, many lenders can offer decisions nearly
instantly. These advancements, which include electronic
appraisal and online title verification, continue to decrease
the time between approval and closing.
Properly planned, remodeling can transform the space in
your home to meet your needs. In addition, today's financing
options make the process more convenient and flexible than
ever before. So whether you choose to hire the experts or do
it yourself, now is a great time to get
started.