|Planning Ahead to Stay on Budget|
My husband and I owned a home remodeling business for several years and we just finished remodeling our own personal home. We have remodeled two personal residences and while the first home was a money pit this second home has been a joy to buy, remodel and live in. I wanted to share what we have learned.
Get the Right Loan
If you can go with the first time FHA homebuyer loans, then that is by far the best way to go. In fact, I recommend waiting to buy until you qualify for one of these mortgage options. FHA has a special category for remodeling with a great rate. We were about to roll our remodel into our FHA mortgage and we still got a great rate that is assumable to boot. We still came out ahead on the value of our home because the FHA guidelines are in place to ensure it. I believe there might be a similar loan product for those of you who are looking at refinancing your home mortgage and rolling the remodel in. Of course you have to discuss this with a good mortgage officer. I recommend finding someone from a trusted friend.
On the Right Foot with the Contractor
FHA Financing makes it easy to get off on the right foot because you have to get approval from the mortgage company to uses the contractor. Once your contractor has been approved, make sure you get an itemized list of repairs that are going to be covered, this will help keep surprise costs to a minimum.
If It Isn't Broke Don't Fix It
Make a realistic list of what you are going to fix. With our first remodel we practically stripped the house to the bare bones to update cosmetics and still ended up with surprise repairs down the road. If something is a little outdated but working just fine then resist the temptation to change it. With our second remodel we were concerned with the age of the kitchen appliances but the bathrooms were in great condition. We cleaned up the caulk around the tub and accessorized the pink tile with grey and black and it looks vintage sheik.
One regret I do have is that we didn't try to sell our vintage appliances on Ebay. We bought and remodeled a 1966 ranch home with all the original fixtures. The light fixtures are so charming and in great repair, the doors are just beautiful, but we feared the oven would kick the bucket on Thanksgiving Day (I heard a story.). Anyway, imagine my surprise a month or so after move in when I discovered our old wall oven was selling on Ebay and the local refurbished appliance store for around $300! It could pay to check out the market before you take it to the landfill.
A Few Last Tips
At least for the first year, roll a home warranty into your purchase contract or purchase one yourself. These warranties usually start around $175 for the year and they cover major appliances, plumbing and air conditioner repair, even pest control. Until you live in your home you really don't know what is going on with it and lets face it, the owners are moving out for a reason. Of course you should have anything major replaced before purchase. We had our roof replaced, that saved us $7000 on our remodel. Consider rolling solar panels into the remodel, they raise the value of your home and lower your electric bill.
If your home is old enough to possibly have asbestos then you will want to hire a contractor to assess the possibility before you begin a remodel project. Asbestos can cause Mesothelioma, a rare type of cancer. Find out if your home could have asbestos before you begin the project so that you can include any removal in the price of the remodel.
You may also want to consider installing solar panels and or a solar water heater while your home is under construction. Installing Solar panels can give you thousands in tax credit and possibly eat the cost of the remodel. You can read more about solar in my post Solar: Is It Right for You?