Home Loan Focus

Archive for the ‘Home Improvements’ Category

This week I am preparing to list my own home on the market.  That preparation is starting by emptying my house of my belongings and furniture.

It also involves finishing one of the home improvement projects that never happened while I lived in the home. 

New Carpet Installation

While we lived in the house we installed thousands of square feet of ceramic tile.  OK, it was more like ‘a thousand’ but felt like ‘thousands’.  That left about 1500 square feet of floor space with twenty year old dingy carpet left to be replaced.  Plus, that carpet was stained from the home improvement projects and cut up a bit from ripping into floors for plumbing upgrades and installing that great looking tile.

So when we went to make the purchase to install the carpet, we had a different perspective than we thought we might have.  Instead of choosing between wood floors and something fancier, we were trying to choose the carpet that would look good enough to sell our house yet still possibly hold up under the strains of renters, should we need to rent the place out in the advent that it did not sell.

Now, our house is literally a mess as we are packing, and we need to have the furniture out of the house by tomorrow morning (or at least pushed to the side or possibly out of some of the rooms so the carpet guys have a place to start).

All in all, our carpet installation cost $2400, which should include tax.  We picked it up on a special 18 month no interest no payment deal.  We could have paid for the carpet but free interest is free interest and the way the economy is going, $2400 will likely only be worth $1900 in today’s dollars 18 months down the road anyway.  So we’ll put the more valuable money today into something else and pay the loan back tomorrow with devalued US dollars.  (Note if we are wrong about that, the economy will be better and we will be better off anyway, so it is a win win no matter what happens.)

We opted for a fairly bright looking carpet color that has a pattern that should not show dirt very well.  The idea is that it will look good for prospective home buyers, but will be durable enough for renters should we turn down that alley way.  So that is it for now.  I won’t have any spare money for Titleist golf balls, but at least we are one step closer to moving this house, and my packing break is now over too!

Let’s get real about our home investments for a second.  There are several trends that you need to not only know but appreciate as you make your home purchasing decisions this years:

1. The Real Estate Market has been inflated
2. Mortgage Lenders have engaged in fraud that increased the real estate market inflation
3. Builders have also served to inflate the market
4. Both the mortgage market and real estate market are in correction now

Here’s what these trends mean for you.  The prices have been high, even too high and that put money in the pockets of builders and mortgage bankers and brokers.  That money came from people just like you.  Now, if you want to give your money away for nothing, then you are wasting your time reading this column.  Feel free to click away now.

The correction is taking place today and on the home shopping front the best place to find homes that have had their prices corrected the most is in the foreclosure market.  These homes have corrected significantly and some may even be value buys.  Why would you pay say 40% more for the same house through normal channels when you can possibly save $80,000 on a home that is in foreclosure.

Here are just a few examples in one of those counties that used to be one of the most inflated markets in the country, southern California.

You can find recent san diego foreclosure listings to review or la jolla foreclosure listings to review. and information from any realtor, but in doing so you essentially have to set up a relationship with that realtor.  That’s fine, but in the world of the internet, if you can do the research before connecting to a realtor so much the better.

Foreclosure listings work differently than normal real estate listings and the rules are different across the country.  Typically, you do not get the same time period to review a home or even have it inspected.  These properties are typically sold ‘as is’.  That means you could end up with a lemon.  You should approach these homes a potential money pits or homes that are only partially constructed.  You may even need to take out a construction loan and fix the place up before you can get real financing.  The point is, do not expect to go in and make a bunch of demands on the seller (the bank).  You are buying the house at what should be bottom basement prices.  This purchase should be all about the price.  If the price isn’t a sweet heart of a deal, then go somewhere else.  DO NOT fall in love with a foreclosure home when you are buying it.

If you can not approach a foreclosure property with this type of discipline, then you will be better off paying the 40% premium and looking for normal real estate listings in San Diego to buy.

One of the questions that we have to consider about the changing environment of real estate is whether or not homeowners will stay in their homes longer that it has become more difficult to borrow and buy and sell their homes.  Over the last couple decades more people have been staying in the same home for a shorter period of time.  Many people continually moved up into bigger and better homes.  This continual movement meant that they did not always have defined a dream home the first time, because they could experiment and try again in a few years when they bought their next house.

Now that things are slowing down and it’s to be more difficult to buy and sell a house, buyers may have to become a little bit more choosy about what they buy and why they buy it.

Impact of Higher Energy Prices on Home Buying Decisions

at the same time there is a slowdown in the real estate and mortgage market, energy prices are at all-time highs.  The price of oil has finally reached the level of $100 a barrel in people are definitely noticing the cost of energy.  I suspect that people may take a look at the homes they are buying and work to ensure that these homes are built and energy efficient ways, using energy-efficient products, and possibly even powered with alternative energy it least in part.

I think the putting green products in the homes before a buyer closes on a home will also become a bigger trend.  Many alternative energy products are expensive and most buyers don’t necessarily want to foot the bill for an energy system separate from their home mortgage.  I suspect that many buyers may start requiring a sellers install alternative energy systems into their houses as a requirement of sale so that the buyers can then finance the upgraded home and the new alternative energy products with a single mortgage.

It only makes sense, why spend $20,000 on an alternative energy system and finance at 10 or 20% interest when you could pay six to 7% interest on the same energy system.  I also think this makes sense for small upgrades like replacing light switches with switches that automatically timeout in turn lights off in many other common everyday things in the household or a house that add to the cost of electricity, heat, natural gas and many more aspects.

They say that the eyes are the windows to the soul, and in a house the windows do enable us to see the soul of a potential home in more ways than one.  The windows on a home let light into your house, they let cool breezes and during the spring, and they let you watch your children play in the backyard to make sure that they’re safe.

Old windows, cloud up and often times refused to be cleaned.  They let you have the wintertime and hot air and during the summertime.  The pinch her fingers when you try and open or shut them, and over time they can be the bane of your existence.

Replacing your windows can save you pockets full of cash in electricity, gas and heating bills, and it can make your home beautiful. If you are looking to buy or sell you should definitely look at the windows and how well they are or are not working. Do not buy a house with old inefficient windows. If the windows are old, find a house that has new windows and don’t waste your time with a house that has not been maintained.

Don’t settle for old windows win you are  moving into a new home. Have the seller replace the windows with the windows that you choose, with the guidance of a contractor that you can trust.  Including new windows into the cost of a new home, will typically save you a good deal of money on heating and air-conditioning costs over the first two years in your new home.  It will also give you peace of mind that your hard-earned money is not going out the window every time you turn the heater or air conditioner on.

If you are moving into a new area, you often times will not know one contractor from the next.  With that in mind we offer a window contractor guide to help you source window contractors and find a window contractor that is right for you and your future home.  Look for contractors that are bonded and insured, especially if you party purchased the home. 

One thing is for certain,once you have had the experience of having new windows in your home,you will not be able to go back to a lifestyle with older, less efficient windows, not without window addiction treatment. 

Nothing dates your home like an old kitchen.  Updating and upgrading your kitchen is one of the best things that you can do to add value to your home before you sell it.  Upgrading your kitchen can add upwards of 30 to 40% to the value of your home.

Upgrading a kitchen is also one of the things that is the most difficult to for a do-it-yourselfer.  Working with tile, marble, granite, water and electricity all come into play in the kitchen and if you do it wrong or make a mistake a home buyer will notice it.  This makes it all the more important to utilize a very good kitchen contractor.  Someone that knows what they’re doing with the kitchen, how to achieve the best results, and how to make the kitchen stand out as the centerpiece to your home.

There are many extremely complicated steps and choices to make as you put together a plan for your kitchen.  Don’t fear a migraine, just move forward and make one decision and choice at the time.  Work your way from the floor up and take off the milestones as you go.  Wherever possible, make your choices count in the areas of efficiency, organization, and opened workspaces.  Once you have those areas covered, then consider the areas where you may add glitz and glamour, but keep in mind nothing but to date on a kitchen like the latest fashion her style is available at today.  Similarly, avoid low-quality products that won’t stand the test of time with a heavy use the kitchen undergoes.  Remodeling the kitchen can be a large budget items and make sure that you do the math, hold your budget tight and ensure that your home has enough room to move in the marketplace compared to other homes and where they’re selling today.

Money Saving Tip!

If you are not certain if you can afford a contractor, or if you think you might be in over your head with a particular remodeling project, it never hurts to get an estimate our opinion from a professional.  You might learn a thing or two and figure out what you’re missing, you might come up with a better plan, layout or design,and you might get your remodeling project on time if you do opt for a professional.

Here’s a tip that can help you sell your home this spring by making your home more attractive, and more affordable to live in for potential buyers.  Replace the siding and upgrade the exterior insulation.

Its a simple move and simple investment and can make a major difference in curb appeal (the trick that actually gets them to stop and look at the house) and counter top appeal.

What’s Counter Top Appeal?

Counter top appeal is the feeling a potential buyer experiences when they walk into a house and read up on some of the facts about the house left on the kitchen counter.  This can include a home warranty offer, it can also include another flyer in color of the home describing the house.  Plus, it should include a 1 year history of the homes heating and electric bills so that a potential home buyer can see just how well the homes systems and insulation perform.

There is nothing better than having a home that has great curb appeal, great door way appeal (that warm fuzzy “Ooh that’s really nice” mention when they walk through the front door) and especially counter top appeal.

Siding a home these days is not terribly expensive and considering heating and cooling costs with oil at $100 a barrel, it is an investment that can save a new home buyer a great deal of money. 

Counter top appeal is not created by leaving your liquor out on the counter and offering free beers and shots hoping to find a buyer willing to put beer goggles on and spend $300k, unless you are sourcing your home buyers before they go to an alcohol rehab.

Where to Find a Siding Contractor?

Now you could probably walk out to the mail box and pick up the siding flyer of the day.  You might even check the yellow pages, but these sources do not guarantee a great siding contractor.  They may not even guarantee a contractor that even knows that they are doing with siding.

However, you can check here to find siding contractors and determine which ones meet your needs and budget.

See our article for Find a Heating or Air Conditioning Specialist to significantly increase the resale value of your home and enable it to sell at all.

In this market if you are selling a house, you need to make sure that your house is primed for sale.  That doesn’t just include curb appeal that means insuring that your house is attractive from every perspective, even when a possible buyer reviews your gas and electric bills.  If your heating bill out of control, that is going to scare a lot of people away from your home. 

Oil is likely to hit $100 a barrel and that will impact heating oil, natural gas, and electricity rates.  No one wants to buy a house that costs a fortune to heat.

So before you spend $10k installing a Bose home theater to make your home more attractive to sell, consider calling in a professional to give you an assessment and guide into making your home energy efficient.

Odds are if you have not had a review done yet, you may not know where to look or who to trust for this type of service.  With that in mind we recommend a listing of pre-screened heating and air conditioning companies that have positive recommendations for work in your area and climate.

You can check out this Guide to Heating and Air Conditioning companies and find a trust worthy company that can help tighten up your home, and make it attractive to sell come next spring when buyers come out looking to make a move and a purchase while the kids are out of school, while temperatures and weather are typically better for home shopping, and when the mortgage companies will have recovered from the sub prime home loan issues.

If you act now, you can also start to build up a heat bill history that will reflect in a 1 year energy audit, which you can then provide to prospective buyers during an open house or a house showing.  I never buy a house these days with out requesting this history, and I am always more at ease when a home seller is more than happy to display and offer a copy of their energy bill history.

With some energy bills topping $400 – $800 per month, this effort can be very important to buyers.  A home that is expensive to heat can be extremely detrimental to the final sales price.  If you make a small investment in your home in insulation and possibly some upgrades to old HVAC equipment, you could see a big return in your sales price especially in very cold or very hot climates.

A bill of $500 per month is worth $6000 in one year.  A very good HVAC unit that can cover a home of 3000 square feet, can start off at $2500 plus labor to install.  At those rates an upgrade can pay for itself in a year.  From a buyer’s perspective, they would rather have this cost financed in the house, than pay for it out of pocket after the fact.  They will also look at the heating cost over a 2.5 year history, which will mean to them that at $500 a month they can expect to pay $15,000 over 2.5 years.

If you spend $4k for a new HVAC upgrade, you might be able to command a price premium on your home of $8k and save the buyer $8k as well.  More importantly in today’s market, failing to do this could prevent your home from selling at all!

I just came across an interesting program that can enable people to borrow up to $30,000 on top of their FHA home loan.  The additional money can be used to repair or upgrade your future or new home in the following areas:

• Repair/Replacement roofs, gutters and downspouts
• Repair/Replacement/upgrade of existing HVAC systems
• Repair/Replacement/upgrade of plumbing and electrical systems
• Repair/Replacement of existing flooring
• Minor remodeling, such as kitchens, which does not involve structural repairs
• Exterior and interior painting
• Weatherization: including storm windows and doors, insulation, weather stripping, etc.
• Appliances – when at least $3,000 of basic home repairs are involved. Appliances may include free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves and may not exceed $2,000 in total cost.
• Improvements for accessibility for persons with disabilities

www.hudclips.org 

I think this is especially important as we consider the rising cost of energy prices. This type of loan can allow a home owner to upgrade to a more efficient heating or air conditioner or other appliances and possibly even add solar energy products.