Home Renovations Are A “Smart Investment” For Homeowners With Rates Still At Historically Low Levels

3 02 2011

 

INTEREST RATES ARE LOW

  • Low interest rates (still under 5% in most cases) make conventional cash-out refinances (if you have required equity in home) extremely attractive
  • An FHA 203k Renovation loan will allow a full home remodel (add a room, renovate the kitchen, add a bathroom, new windows and flooring, etc.) up to 110% of the home’s  “after-improvement” value multiplied by 96.5%. 
CONTRACTOR’S ARE DISCOUNTING
  • Business is still slow for contractors
  • The top pros in town will happily bid on your job — and prices can be 10-20% below what you would have paid 3 years ago

COST OF MOST MATERIALS ARE LOWER

  • Building supply costs have tumbled too.
  • Plywood is down 23% since its peak in the mid-2000s.
  • Drywall is off 29%,
  • Framing lumber is 35% lower
  • Other supplies are only slightly lower, such as roofing and insulation

ENERGY COSTS WILL BE LOWER AFTER THE REMODEL

  • Basic remodels will save utilty expenses with new insulation, windows and
  • Lower electric and heating bills are like an annual dividend.

RENOVATING YOUR HOME COSTS LESS THAN TRADING UP

  • The median home price down 22% since 2006
  • Selling your home in this market will be tough with 10-20% discount likely, including commissions and fees
  • Moving expenses remain expensive

MOST IMPROVEMENT PROJECTS WILL ADD VALUE LONG-TERM

  • Keep your home consistent with the best homes in the neighborhood and you will earn back the costs over time
  • Exceeding the other homes in the neighborhood and the costs don’t make make as much
  • Renovating that 30-to 40-year old kitchen makes sense. Adding bedrooms makes sense.

For more: http://money.cnn.com/2011/02/02/pf/saving/invest_in_your_home.moneymag/

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