Dave Tedoni's Blog
Home improvements are a vital part to keeping your home up-to-date with the times and also to ensure that it doesn’t lose value when it comes time to sell.
To save money, many homeowners take the do-it-yourself route and use the tools at their disposal to upgrade their homes. Sites like YouTube have made it easier than ever to follow step-by-step tutorials that show you how to make substantial repairs and upgrades to your home without having to pay a professional.
The down side, however, is that when you choose to DIY, you take on the risk of going over budget by making mistakes. You also risk stretching out your project weeks or months longer than necessary due to a lack of time to work on it.
In today’s post, we’re going to talk about how you can stay on budget and on track to finish your home improvement project without bringing in the professionals.
Making a timeline
Let’s start with the big picture for your home renovations. When deciding which improvements to make, it’s important to know your limits in terms of the work you can do.
Set a reasonable number of hours you can work on your projects per week. Go easy on yourself. Most of us are already tired when we get home from work and probably won’t be able to start tackling big projects in the evenings. Rather, try to give yourself one weekend day to work on your projects and one weekend day to relax.
The most important aspect of creating your timeline is to try and keep your schedule open. So, write down the time you want to work on your home in your calendar, planner, or whichever app or tool you use to plan your time.
This will help you to avoid creating conflicting events and obligations, and help you stay on track to finishing your improvement projects.
If you’re looking for an evening activity related to your home improvement projects, it’s a good idea to start watching some video tutorials of people doing the same renovations as you. This will help you avoid mistakes and look out for common obstacles that you’ll face along the way.
Budgeting your improvement
You’ll want to save up for your project in advance, if possible, to avoid accumulating credit card debt. Your home improvement project should, in effect, gain you money by increasing the value of your home, not make you lose money on credit card interest payments.
Budgeting in itself is an art that few of us are taught in school. Fortunately, there are several free budgeting apps available. Or, you can simply draw one up yourself.
The key to creating a home improvement budget is to know how much of your monthly savings you can devote to this project without having to dip into other funds. To do this, you’ll need a clear understanding of where your income goes.
Once you have a budget and a timeline for your home improvement project, you’re ready to begin. Just make sure you check in on your timeline and your budget throughout the length of the project to make sure you’re meeting your goals and aren’t overspending.
If you’re a newer homeowner, odds are you don’t really “own” your home outright. Rather, you likely have equity in your home.
In this article, we’re going to talk about what home equity is, how to use it to your advantage, and things you should avoid using your home equity toward.
What is home equity?
Unless you’re one of the lucky few who paid for their homes in cash, you probably took out a mortgage. As you pay off that mortgage you build equity.
Home equity is essentially the value of a property that a homeowner has at their disposal due to paying back part or all of their mortgage.
However, there’s another factor at play in home equity, and that’s market value.
Since the housing market fluctuates, the value of your home does as well, and as a result, your home equity changes with the market value of a house. That might sound worrying, but the good news is that due to something called appreciation.
In the same way that the cost of living tends to rise each year with inflation, so do housing prices. However, appreciation isn’t the only factor at play in the valuation of your house. As your home ages, it will likely need some renovations, which could decrease the home value.
Generally speaking, however, your equity achieves a net gain as you pay your mortgage and the value appreciates.
Now that we know why equity can be so beneficial as an asset, let’s talk about ways to build it.
The best way to build home equity is to repay your home loan. However, more than simply repaying, you’ll want to repay in the fewest number of years to avoid paying more in interest. The longer you take to pay your mortgage, the more interest accrues that could have been used toward other investments.
The second way to increase equity is one we mentioned before--market fluctuation--namely appreciation. To improve the chances of getting a high appraisal of your home, it’s important to keep up with maintenance and make smart renovation choices that will have a high return on investment.
Using home equity
The best use of home equity is to leave it be and increase its value over time. However, that isn’t always possible for all of us. Since many of us need to move before repaying our full mortgage, equity allows homebuyers to use their equity toward their next mortgage.
Another option is to take out a home equity loan or home equity line of credit. Ideally, you’ll only use these loans if you’re planning on using the loan money to increase the value of the home via home improvement projects.
Borrowing against your home equity does come with risks. Since you are putting your share of your home on the line, there is a chance of your home being foreclosed on if you don’t repay the home equity loan. However, lenders typically seek other methods of repayment or settlement before foreclosure.
If you live in an older home or neighborhood there’s a good chance your house holds a rich history within. Aside from talking with the previous owners, most people don’t look much further into the stories their house might have.
If you’re curious about your family history there are resources available so you can find long lost relatives and discover where your family lived over the years. Most people don’t think to do the same research for their home, even though they might spend years in it.
Why should I research the history of my home?
There are many reasons why someone might want to learn more about the history of their home. The main reason is because it’s fun and interesting. Your search will bring you to places you’ve likely never been before, whether it’s federal records on the internet, or to dusty microfilm archives in your basement.
Aside from the fun of researching, your work could also bring to light useful information. You might be able to add to resale value by discovering additional details about the home. Similarly, if you come across old photos of the home you could attempt to restore some architectural and design details to their original form. Whether you do this to stay true to the roots of your home or to attempt to add value is up to you.
Where should I begin?
Like most research projects, the internet is probably your best place to start. To learn more about the property your home sits on you could search the National Archives land records. These records detail when a piece of land was transferred from the U.S. government to private ownership. In other words, you might be able to find information about the first person to ever own your home.
A good place to head from there is to run a title search on your property. You will most likely need to visit the town clerk or your local courthouse to access titles. This will paint a fuller picture of who the people who owned your home were.
Now that you know who, learning about the home itself will be much easier. There are several genealogy sites online (some free, others paid) which will help you learn about the previous inhabitants of your home. Feel free to Google their names, especially if they were a public figure. You might even find photos of your home.
What to do if you can’t find any information
Just because you can’t find any photos or details online doesn’t mean they don’t exist. You might need to reach out to relatives of previous owners to find out more information.
Another option is your local library. Not only do libraries have a local history section complete with town records, but the librarians are also trained researchers who will be able to help you navigate the stacks. You could discover books containing details like population, town meeting notes, and new ordinances, including building codes.
Once you’ve learned a bit about the history of your home, see if you can spot the changes that have been made to it over the years.
There is a lot that goes into the buying and selling of a home Not only are there many steps to take but it can feel like there is a report for everything. It’s easy to forget what they are or why they are necessary.
Three processes that seem similar to home buyers are the home inspection, comparative market analysis, and the appraisal.
Here’s what each them is and how they are different:
First, let’s look at the home inspection.
The home inspection
What it is:
This is probably the one you are most familiar with and have heard the most about. During a home inspection, an inspector is paid to come and test all of the appliances, outlets, plumbing as well as the heating and cooling system.
What this information is for:
This information is for you the buyer, It is to help make a well-informed decision as to whether the investment you are making is worth the current state of the home. Whether there be repairs that will have to be made or replacements that will need to happen down the line.
The custom market analysis or CMA
What it is:
A sales report your real estate compiles using data they have exclusive access to. This data is compiled into a database used solely by other real estate agents.
What this information is for:
A CMA is used by you and your agent to determine if an asking/selling price is fair. You’ll be able to compare the pricing to other listings and conclude whether it is higher, lower or on par with other offers. This is incredibly useful no matter which end of the spectrum you plan on selling or buying.
What it is: A licensed appraiser comes to visit the home and inspect it solely for value. This is determined by the location, state of and surroundings of the home. Your potential home will be compared to other similar properties in the area to come to a conclusive value.
What this information is for:
The final approval of your mortgage terms by your lender. If the determined value is much lower than your offering price you can be declined a mortgage.
As you can see, each of these processes has varying impact on the final purchase of your home. The information obtained from a home inspection is up to solely your discretion. That gathered from the CMA helps you to determine where the asking price of a home is sitting in comparison to others on the market. And in turn, whether you’ve got a really great deal on your hands or an inflated price. And lastly, perhaps the most important is the appraisal. The information gathered from this process is what your lender uses to determined whether or not to lend you the requested amount.