Each month, we publish a series of articles of interest to homeowners -- money-saving tips, household safety checklists, home improvement advice, real estate insider secrets, etc. Whether you currently are in the market for a new home, or not, we hope that this information is of value to you. Please feel free to pass these articles on to your family and friends.
Home Improvement Tips to Increase the Value of Your Home
Buying a home may be a dream, but the initial purchase is only the introduction to that dream. There's always something about your house that could be a little better, a little closer to perfect. Now, with a little planning, you can bring your home closer to your dream of perfection.
Many home improvement projects begin with someone in the household saying, "Wouldn't it be nice ...?" What follows may be a wish for a remodeled kitchen or a room addition with space to accommodate every family member's needs. However, reality usually intrudes upon this daydream: There's only so much money and so much space. The trick is turning your dreams into reality.
Also This Month...
11 Things You Need to Know to Pass Your Home Inspection
According to industry experts, there are at least 33
physical problems that will come under scrutiny during a home inspection.
We've identified the 11 most common of these and, if not identified and
dealt with, any of these 11 items could cost you dearly in terms of
Common Mistakes Made With Money and How to Avoid Them
Everybody makes mistakes with their money. The important thing is to keep them to a minimum. And one
of the best ways to accomplish that is to learn from the mistakes of others. Here is our list of the top
mistakes people make with their money, and what you can do to avoid these mistakes in the first
Home Improvement Tips to Increase the Value of Your Home
Buying a home may be a dream, but the initial purchase is only
the introduction to that dream. There's always something about your house that could
be a little better, a little closer to perfect. Now, with a little planning, you
can bring your home closer to your dream of perfection.
Reasoning Your Redo
Many home improvement projects begin with someone in the household
saying, "Wouldn't it be nice ...?" What follows may be a wish for a remodelled kitchen
or a room addition with space to accommodate every family member's needs. However,
reality usually intrudes upon this daydream: There's only so much money and so much
space. The trick is turning your dreams into reality. Start by evaluating your needs.
Most homeowners consider home improvements for one of these reasons.
- You need to update the out-of-date. If your kitchen still
sports appliances and decor from decades past, now may be the time to make it current.
- You need to replace fixtures or appliances. Sometimes a
home improvement project grows out of an immediate need to replace broken or inefficient
fixtures. If the sink, tub or toilet has to be replaced, many people take the opportunity
to refurbish the entire bathroom.
- You're selling your home. You want to be sure you'll get
top dollar from the sale of your home, and that may be the rallying cry for some
home improvement projects.
- You're staying put. You thought about moving, but now you
realize that improving your present home is a better option.
- Your family has grown and you need more space.
Improving to Move or Improving to Stay
You need to evaluate your plans carefully if you're improving
your home to put it on the market. Cutting corners could hurt rather than help your
prospects, but you don't want to go overboard either. Potential buyers may not want
to pay for the extras you have included, such as a hot tub or pool. It's best to
keep changes simple.
Also keep in mind that people viewing your house may not share
your tastes and therefore won't necessarily appreciate the time and effort you put
into finding just the right shade of green paint for the walls.
Improving to sell is easier if you mentally put yourself on
the other side of the proverbial fence: What is important to the home buyer? Here's
a list of remodeling projects that buyers are likely to find valuable:
- Adding or remodeling a bath
- Improving the kitchen
- Adding a new room
- Adding a bedroom
- Adding or enclosing a garage
If you're remodeling in order to stay in your home, you still
need to avoid over improving it. You'll probably sell someday, and even if your
house is the best on the block, you may have a hard time convincing buyers to pay
extra for the things you found so important. Keep the value of other homes in the
area in mind whenever you consider improvements. Your home's value should be no
more than 20% above the average. That means a $10,000 kitchen improvement project
might be a better idea than a $10,000 hot tub, especially if no other homes in your
area have hot tubs.
Unfortunately, some home improvement projects get started because
something is broken. A leaky plumbing fixture may be the first step to a major bath
remodeling. After all, if the tub has to be replaced, why not do the whole room?
While that's certainly one reason to remodel, you'll generally
want to avoid basing your home improvement projects on immediate need. Proper maintenance
will help to minimize problems. Go over every part of your home at least once a
year. Check out the roof, plumbing, electrical wiring, etc. As soon as you notice
a problem, fix it. Early attention to repairs will help you avoid a larger expense
later on. Remember maintenance does not add to the value of your home. Repairs,
generally, are not improvements but necessities.
Let's face it, home projects can be expensive. You may be tempted
to tackle them yourself as a way to save money. For small projects, that may be
a smart move. You don't have to wait for someone else to fit your house into their
schedule, and you can take pride in doing the work yourself. Unless you're particularly
handy, however, large home improvement projects are better left to the pros. If
you're remodeling the kitchen, ask yourself if you can handle the plumbing, electrical
and carpentry work. And don't forget that you need to finish it all quickly, because
in the meantime you'll be without a kitchen and eating out can be costly. Keep in
mind, do-it-yourself jobs generally take more time and you're responsible for obtaining
the necessary permits and inspections.
Hiring people who have experience can save you money and time,
too. For example, these professionals can help you get a custom look using stock
products, and that can be a significant savings. Getting something done right--the
first time--will give you value that lasts for years.
Word-of-mouth is a good way to start looking for home improvement
specialists. Check with friends, business associates and neighbors for recommendations.
Always ask for at least three references - and check them out. Check, too, with
your local chapter of the Better Business Bureau or Chamber of Commerce. You can
find the number in the community services section of your telephone book. Make sure
everyone is in agreement about design, schedule and budget. Get the details down
in writing in a signed contract. You'd also be wise to check on professional certifications
and licenses, where required, and insist that any contractors you hire are fully
insured and bonded. Contact your town or city Building Department for information.
In particular, make sure contractors carry workers' compensation insurance so that
if any workers are injured on the job, you won't be held liable. Ask for a copy
of their insurance certificates. Also make sure that you or the contractor secure
any necessary permits before beginning the work. Contact your local Planning and
Zoning Commission for information.
Here's a quick overview of some of the pros you may work with
in remodeling your home:
Architect: These professionals design homes or additions
from the foundation to the roof. If you're planning structural changes--adding or
taking out walls, for example--or anticipate a complex design, you'll probably want
an architect. You may pay an hourly fee or a flat fee. Be sure to get an estimate
of the total cost: It can take 80 hours or more to draw up plans for a major remodeling
Contractor: This person oversees the nuts-and-bolts
aspects of your home improvement project, such as hiring and supervising workers,
getting permits, making sure inspections are done as needed and providing insurance
for work crews. You may wish to get proposals from one or more reputable contractors,
based on specific details of your project. Be sure each contractor bids on exactly
the same plan for comparison purposes. Once you've chosen a contractor, make sure
your contract specifies that you will pay in several stages. It's customary to pay
one third when the contract is signed so that the contractor can buy supplies. The
number and timing of other payments depends on the size of the job, but do not make
final payment until all work is successfully completed, inspected and approved.
Interior Designers: These specialists offer advice on
furnishings, wall coverings, colors, styles and more. They can help save you time
(by narrowing down selections) and money (from the professional discounts they might
receive). When meeting with an interior designer, be sure to talk about your personal
style and preferences. Expect to pay anywhere from $50 to $150 per hour, or you
may negotiate a flat fee of perhaps 25% of the total project cost.
Depending on the scope of your home improvement plans, finding
funding may be a project itself. If the project is small, you may be able to save
for it from your regular household budget. For larger projects, you'll probably
need to borrow money. If you participate in a 401(k) or 403(b) plan at work, you
may be able to get a short-term loan from your account. To find out if this option
is available to you and to learn about any tax implications, talk to your benefits
administrator. Another possibility is borrowing against the cash value of your life
insurance policy. If you're interested in finding out more about this type of loan,
talk to your life insurance agent.
To take out other types of home improvement loans, head to
your local bank, savings and loan, or credit union. Compare interest rates, repayment
options and penalties from lending institutions before deciding on one of the following
Second mortgage: This is a loan against the equity in
your home. It is, in essence, an additional mortgage. Typically, financial institutions
will let you borrow up to 80 percent of the appraised value of your home, minus
the balance on your original mortgage. For example, if your home is appraised at
$100,000 and your current mortgage balance is $70,000, you may be able to borrow
$10,000 by way of a second mortgage. You may also incur all the fees normally associated
with a mortgage - closing costs, title insurance and processing fees. Talk to your
tax advisor about whether the interest on a second mortgage may be tax-deductible.
Refinancing: This involves paying off your old loan
and taking out a new mortgage on your home. To refinance, generally you'll need
to have equity in your home, a solid credit rating and a steady income. You'll incur
all the closing costs that go along with getting a new mortgage, so unless you're
doing extensive remodeling and can get a mortgage interest rate at least two points
less than you're currently paying, this type of loan may not be for you.
Home Equity Line of Credit: Like a second mortgage,
a home equity loan lets you tap up to about 80 percent of the appraised value of
your home, minus your current mortgage balance. Since it's set up as a line of credit,
you won't be charged interest until you make a withdrawal, but you will have to
pay closing costs. You can make withdrawals gradually as you start paying contractors
and suppliers. The interest rate charged is usually variable and may be based on
the outstanding balance. Make sure you understand the terms of the loan. If, for
example, your loan stipulates that you need to pay interest only for the life of
the loan, you'll have to pay back the full amount borrowed at the end of the loan
period or you could lose your home. The interest on home equity loans may be deductible;
talk to your tax advisor.
Unsecured Loan: Although the interest rates charged
are often higher and you generally will not be able to get a tax deduction for the
interest paid, the costs of obtaining an unsecured loan are usually lower. The relative
ease of obtaining this type of loan makes it popular for small projects costing
$10,000 or less. The lender will evaluate your application based on credit history
Be House Smart: You'll be happiest with the outcome
of a home improvement project if you plan carefully and do your homework. Armed
with the information in this pamphlet and a realistic idea of your needs and budget,
you'll find your home getting closer to your dream of perfection.
11 Things You Need to Know to Pass Your Home Inspection
"According to industry experts, there are at least 33
physical problems that will come under scrutiny during a home inspection when
your home is for sale. Here are 11 you should know about if you're planning to
put your home up for sale."
Homebuyers Want to Know Your Home Inside and Out
While homebuyers are as individual as the homes they plan on purchasing,
one thing they share is a desire to ensure that the home they will call their
own is as good beneath the surface as it appears to be. Will the roof end up
leaking? Is the wiring safe? What about the plumbing? These, and
others, are the questions that the buyers looking at your home will seek
professional help to answer.
According to industry experts, there are at least 33 physical problems
that will come under scrutiny during a home inspection. We've identified the
11 most common of these and, if not identified and dealt with, any of these 11
items could cost you dearly in terms of repair.
In most cases, you can make a reasonable pre-inspection yourself if you
know what you're looking for. And knowing what you’re looking for can help
you prevent little problems from growing into costly and unmanageable ones.
11 Things You Need to Know to Pass Your Home Inspection
1. Defective Plumbing
Defective plumbing can manifest itself in two different ways: leaking, and
clogging. A visual inspection can detect leaking, and an inspector will gauge
water pressure by turning on all faucets in the highest bathroom and then
flushing the toilet. If you hear the sound of running water, it indicates that
the pipes are undersized. If the water appears dirty when first turned on at the
faucet, this is a good indication that the pipes are rusting, which can result
in severe water quality problems.
2. Damp or Wet Basement
An inspector will check your walls for a powdery white mineral deposit a few
inches off the floor, and will look to see if you feel secure enough to store
things right on your basement floor. A mildew odor is almost impossible to
eliminate, and an inspector will certainly be conscious of it.
It could cost you $200-$1,000 to seal a crack in or around your basement
foundation depending on severity and location. Adding a sump pump and pit could
run you around $750 - $1,000, and complete waterproofing (of an average 3
bedroom home) could amount to $5,000-$15,000. You will have to weigh these
figures into the calculation of what price you want to net on your home.
3. Inadequate Wiring & Electrical
Your home should have a minimum of 100 amps service, and this should be
clearly marked. Wire should be copper or aluminum. Home inspectors will look at
octopus plugs as indicative of inadequate circuits and a potential fire hazard.
4. Poor Heating & Cooling Systems
Insufficient insulation, and an inadequate or a poorly functioning heating
system, are the most common causes of poor heating. While an adequately clean
furnace, without rust on the heat exchanger, usually has life left in it, an
inspector will be asking and checking to see if your furnace is over its typical
life span of 15-25 yrs. For a forced air gas system, a heat exchanger will come
under particular scrutiny since one that is cracked can emit deadly carbon
monoxide into the home. These heat exchangers must be replaced if damaged -they
cannot be repaired.
5. Roofing Problems
Water leakage through the roof can occur for a variety of reasons such as
physical deterioration of the asphalt shingles (e.g. curling or splitting), or
mechanical damage from a wind storm. When gutters leak and downspouts allow
water to run down and through the exterior walls, this external problem becomes
a major internal one.
6. Damp Attic Spaces
Aside from basement dampness, problems with ventilation, insulation and vapor
barriers can cause water, moisture, mould and mildew to form in the attic. This
can lead to premature wear of the roof, structure and building materials. The
cost to fix this damage could easily run over $2,500.
7. Rotting Wood
This can occur in many places (door or window frames, trim, siding, decks and
fences). The building inspector will sometimes probe the wood to see if this is
present - especially when wood has been freshly painted.
8. Masonry Work
Re-bricking can be costly, but, left unattended, these repairs can cause
problems with water and moisture penetration into the home which in turn could
lead to a chimney being clogged by fallen bricks or even a chimney which falls
onto the roof. It can be costly to rebuild a chimney or to have it repainted.
9. Unsafe or Over-fused Electrical Circuit
A fire hazard is created when more amperage is drawn on the circuit than was
intended. 15 amp circuits are the most common in a typical home, with larger
service for large appliances such as stoves and dryers. It can cost several
hundred dollars to replace your fuse panel with a circuit panel.
10. Adequate Security Features
More than a purchased security system, an inspector will look for the basic
safety features that will protect your home such as proper locks on windows and
patio doors, dead bolts on the doors, smoke and even carbon monoxide detectors
in every bedroom and on every level. Even though pricing will vary, these
components will add to your costs. Before purchasing or installing, you should
check with your local experts.
11. Structural/Foundation Problems
An inspector will certainly investigate the underlying footing and foundation
of your home as structural integrity is fundamental to your home.
When you put your home on the market, you don't want any unpleasant
surprises that could cost you the sale of your home. By having an understanding
of these 11 problem areas as you walk through your home, you'll be arming
yourself against future disappointment.
Common Mistakes Made With Money and How to Avoid Them
Everybody makes mistakes with their money. The important thing is to keep them to a minimum. And one of the best ways
to accomplish that is to learn from the mistakes of others. Here is our list of the top mistakes people
make with their money, and what you can do to avoid these mistakes in the first place.
1. Buying items you don't need...and paying extra for them in interest. Every time you have an urge to do a little
"impulse buying" and you use your credit card but you don't pay in full by the due date, you could be paying
interest on that purchase for months or years to come. Spending money for something you really don't need can
be a big waste of your money. But you can make the matter worse, a lot worse, by putting the purchase on a credit
card and paying monthly interest charges.
Research major purchases and comparison shop before you buy. Ask yourself if you really need the item. Even better,
wait a day or two, or just a few hours, to think things over rather than making a quick and costly decision you may
come to regret.
There are good reasons to pay for major purchases with a credit card, such as extra protections if you have problems
with the items. But if you charge a purchase with a credit card instead of paying by cash, check or debit card
(which automatically deducts the money from your bank account), be smart about how you repay. For example, take
advantage of offers of "zero-percent interest" on credit card purchases for a certain number of months
(but understand when and how interest charges could begin).
And, pay the entire balance on your credit card or as much as you can to avoid or minimize interest charges,
which can add up significantly.
If you pay only the minimum amount due on your credit card, you may end up paying more in interest charges
than what the item cost you to begin with.
Example: If you pay only the minimum payment due on a $1,000 computer, let's say it's about $20 a month,
your total cost at an Annual Percentage Rate of more than 18 percent can be close to $3,000, and it will
take you nearly 19 years to pay it off.
2. Getting too deeply in debt. Being able to borrow allows us to buy clothes or computers, take a vacation or
purchase a home or a car. But taking on too much debt can be a problem, and each year millions of adults of
all ages find themselves struggling to pay their loans, credit cards and other bills.
3. Learn to be a good money manager. Also
recognize the warning signs of a serious debt problem. These may include borrowing money to make payments on
loans you already have, deliberately paying bills late, and putting off doctor visits or other important
activities because you think you don't have enough money.
If you believe you're experiencing debt overload, take corrective measures. For example, try to pay off your
highest interest rate loans (usually your credit cards) as soon as possible, even if you have higher balances
on other loans. For new purchases, instead of using your credit card, try paying with cash, a check or a debit card.
There are also reliable credit counselors you can turn to for help at little or no cost.
Unfortunately, you also need to be aware that there are scams masquerading as 'credit repair
clinics' and other companies, such as 'debt consolidators', that may charge big fees for unfulfilled promises or
services you can perform on your own.
4. Paying bills late or otherwise tarnishing your reputation. Companies called credit bureaus prepare credit reports
for use by lenders, employers, insurance companies, landlords and others who need to know someone's financial
reliability, based largely on each person's track record paying bills and debts. Credit bureaus, lenders and other
companies also produce "credit scores" that attempt to summarize and evaluate a person's credit record using a
While one or two late payments on your loans or other regular commitments (such as rent or phone bills) over a
long period may not seriously damage your credit record, making a habit of it will count against you. Over time
you could be charged a higher interest rate on your credit card or a loan that you really want and need. You could
be turned down for a job or an apartment. It could cost you extra when you apply for auto insurance. Your credit
record will also be damaged by a bankruptcy filing or a court order to pay money as a result of a lawsuit.
So, pay your monthly bills on time. Also, periodically review your credit reports from to make sure their information accurately reflects the accounts
5. Having too many credit cards. Two to four cards (including any from department stores, oil companies and other retailers)
is the right number for most adults. Why not more cards?
The more credit cards you carry, the more inclined you may be to use them for costly impulse buying. In addition, each
card you own — even the ones you don't use — represents money that you could borrow up to the card's spending limit. If
you apply for new credit you will be seen as someone who, in theory, could get much deeper in debt and you may only
qualify for a smaller or costlier loan.
Also be aware that card companies aggressively market their products on college campuses, at concerts, ball games or
other events often attended by young adults. Their offers may seem tempting and even harmless — perhaps a free T-shirt or
Frisbee, or 10 percent off your first purchase if you just fill out an application for a new card — but you've got to
consider the possible consequences we've just described. Don't sign up for a credit card just to get a great-looking
T-shirt. You may be better off buying that shirt at the store for $14.95 and saving yourself the potential
costs and troubles from that extra card.
6. Not watching your expenses. It's very easy to overspend in some areas and take away from other priorities, including your
long-term savings. Our suggestion is to try any system — ranging from a computer-based budget program to
hand-written notes — that will help you keep track of your spending each month and enable you to set and stick to
limits you consider appropriate. A budget doesn't have to be complicated, intimidating or painful — just something
that works for you in getting a handle on your spending.
7. Not saving for your future. We know it can be tough to scrape together enough money to pay for a place to live, a car
and other expenses each month. But experts say it's also important for young people to save money for their long-term
goals, too, including perhaps buying a home, owning a business or saving for your retirement (even though it may be 40 or
50 years away).
Start by "paying yourself first". That means even before you pay your bills each month you should put money into savings
for your future. Often the simplest way is to arrange with your bank or employer to automatically transfer a certain
amount each month to a savings account or to purchase a Savings Bond or an investment, such as a mutual fund that
buys stocks and bonds.
Even if you start with just $25 or $50 a month you'll be significantly closer to your goal. The important thing is to
start saving as early as you can — even saving for your retirement when that seems light-years away — so you can benefit
from the effect of compound interest. Compound interest refers to when an investment earns interest, and later that combined amount earns
more interest, and on and on until a much larger sum of money is the result after many years.
Banking institutions pay interest on savings accounts that they offer. However, bank deposits aren't the only way to make
your money grow. Investments, which include stocks, bonds and mutual funds, can be attractive alternatives to bank deposits
because they often provide a higher rate of return over long periods, but remember that there is the potential for a
temporary or permanent loss in value.
8. Paying too much in fees. Whenever possible, use your own financial institution's automated teller machines or the ATMs
owned by financial institutions that don't charge fees to non-customers. You can pay $1 to $4 in fees if you get cash from
an ATM that isn't owned by your financial institution or isn't part of an ATM "network" that your bank belongs to.
Try not to "bounce" checks — that is, writing checks for more money than you have in your account, which can trigger
fees from your financial institution (about $15 to $30 for each check) and from merchants. The best precaution is to
keep your checkbook up to date and closely monitor your balance, which is easier to do with online and telephone banking.
Remember to record your debit card transactions from ATMs and merchants so that you will be
sure to have enough money in your account when those withdrawals are processed by you bank.
Financial institutions also offer "overdraft protection" services that can help you avoid the embarrassment and
inconvenience of having a check returned to a merchant. But be careful before signing up because these programs come with
their own costs. Whenever possible, use your own financial institution's automated teller machines or the ATMs owned by
institutions that don't charge fees to non-customers.
Pay off your credit card balance each month, if possible, so you can avoid or minimize interest charges. Also send in your
payment on time to avoid additional fees. If you don't expect to pay your credit card bill in full most months, consider
using a card with a low interest rate and a generous "grace period" (the number of days before the card company starts
charging you interest on new purchases).
9. Not taking responsibility for your finances. Do a little comparison shopping to find accounts that match your needs at the
right cost. Be sure to review your bills and bank statements as soon as possible after they arrive or monitor your accounts
periodically online or by telephone. You want to make sure there are no errors, unauthorized charges or indications that a
thief is using your identity to commit fraud.
Keep copies of any contracts or other documents that describe your bank accounts, so you can refer to them in a dispute.
Also remember that the quickest way to fix a problem usually is to work directly with your bank or other service provider.