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| Home remodeling: Pick renovations
that pay off |
| By Jay
MacDonald • Bankrate.com |
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If your remote control is stuck on Home and Garden
Television, if you recognize Bob Vila's voice sight unseen, and
you're on a first-name basis with the clerks at Home Depot, chances
are you've caught the home-improvement bug.
You're not alone. Today, Americans are sprucing up
everything from Arizona tract homes and New England saltboxes to
Florida condos. About half of you prefer the challenge and savings
of doing it yourselves, while others prefer to watch as contractors
give new life to old rooms.
But when it comes time to sell, will you recoup the
cost of that new master suite, state-of-the-art kitchen or dormered
attic loft? The time to find out is before you pull out the power
saw or contract for a home makeover.
Should
you stay or should you go
Both remodeling and relocating can be expensive.
The difference, of course, is that the money spent on remodeling is
reinvested into your house, and if you finance correctly, the interest
on your payments can be tax deductible.
The American
Homeowner Foundation estimates the total cost of moving to be
at least 10 percent of your home's current value. In other words,
if you can make things right with your home for less than 10 percent
of what you could sell it for, it makes sense to stay put and fix
it up.
If you have little choice but to move (to a new job,
for example), rule of thumb suggests you put the money just as carefully
into your new house, not your old.
Equity
options
Fortunately, several financing options for home
renovations are readily available today.
If you have the equity to match your total project
cost, a traditional home
equity loan might your best bet. If you are unsure of how these
loans work, Bankrate.com's
home equity basics can help.
If your improvements include energy-efficient upgrades
(insulation, thermal windows, new HVAC system), you might also qualify
for energy-saving loans through local utilities or related businesses.
Remodels
that pay off
What can you expect to recoup for renovations to
this old house?
According to the 2004
survey by Remodeling magazine that compares the cost of construction
to likely return on investment (ROI) at resale, minor kitchen remodels
rule, returning 92.9 percent of your investment, followed closely
by new siding at 92.8 percent.
Here's what's hot in remodels, room by room:
- Kitchens typically
suffer the most wear and tear. And because kitchens tend to follow
style and color trends, they often seem dated sooner than other
rooms in the home. The most popular minor improvements include
adding functionality with dual sinks and cooking stations, and
cosmetic improvements such as under-cabinet lighting, marble or
granite countertops and ceramic tile backsplashes. To add space,
consider a walk-in pantry or breakfast alcove.
"The younger buyers, especially the baby boomers, want a modern
kitchen with the cooktop stove and nice cabinets, not to mention
wine coolers and subzero refrigerators," says Mary Johnson, residential
specialist with Premier
Properties of Naples, Fla. "I think it does make a difference.
Even if it's just a cooktop stove, they walk in and say, 'Oh,
it's a remodeled kitchen!'"
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