Maintaining and Improving Your
Keep Your Eye on the Prize
Renovating and Adding Value
Building Permits and Zoning
Financing Remodeling Projects
Keep Your Eye on the Prize
Question: Is it true you never really stop fixing up a home?
Answer: From the day you move in to the day you sell your home, there will
always be something that will need to be repaired or remodeled. You may want to
undertake some changes simply to elevate your comfort level - like installing
central air conditioning - or spruce up the home's aesthetics, such as adding a
few stained-glass windows. But other work will need to be done to maintain the
property and minimize problems later on. For example, replacing a hazardous
roof, fixing broken windows, and repairing leaky pipes. These are all
necessities. Left undone, they can lead to major problems and damages within the
home. If you decide one day to sell, other improvements will likely be made to
increase the home's value and appeal to potential buyers.
Question: Is there anything I should pay special attention to?
Answer: From the very beginning, get in the habit of taking an inventory at
least once every year of every nook and cranny of your home to check for
potential problems. Examine the roof, foundation, plumbing, electrical wiring -
basically everything. Try to fix trouble spots as soon as you uncover them. This
proactive approach will help you avoid larger expenses later on, so leave no
stone unturned when taking your inventory.
Question: What about the unseen problems like toxic gases?
Answer: Problems with your chimney, mechanical devices on your heating
appliance, and pressure within the home can all cause combustion spillage, the
unwanted flow of combustion gases into your home. Present in these gases are
toxic elements such as carbon monoxide, sulfur dioxide, and nitrogen oxides.
The best way to prevent spillage is to hire a professional - preferably one who
specializes in building inspection, indoor air quality, ducting, chimneys and
heating equipment - to do a yearly maintenance check of all your combustion
appliances. These appliances include a gas-fired furnace, boiler, or water
heater, an oil-fired furnace, boiler, or water heater, and a fireplace. The
service professional can check for heat exchanger leakage, evidence of start up
spillage, and condensation in the chimney. Maintenance normally includes a
tune-up, or in the case of a chimney, clearing it of debris and fixing cracks on
the inside wall.
Question: How much, on average, can I expect to spend on maintenance?
Answer: Expect to spend one percent of the purchase price of your home every
year to handle a myriad of tasks, including painting, tree trimming, repairing
gutters, caulking windows, and routine system repairs and maintenance.
An older home will usually require more maintenance, although a lot will depend
on how well it has been maintained over the years.
Tell yourself that the upkeep of your home is mandatory, and budget accordingly.
Otherwise, your home's value will suffer if you allow it to fall into a state of
disrepair. Remember, there is usually a direct link between a property's
condition and its market value: The better its condition, the more a buyer will
likely pay for it down the road.
Also, adopt the attitude that the cost of good home maintenance is usually minor
compared to what it will cost to remedy a situation that you allowed to get out
of hand. For example, unclogging and sealing gutters may cost a few hundred
dollars. But repairing damage to a corner of your home where gutters have leaked
can potentially cost several thousands dollars.
Renovating and Adding Value
Question: What are the main reasons why homeowners remodel?
Answer: There are many reasons. Home remodeling can improve the appearance of
your home, enhance its value, add to your quality of life, and appeal to future
homebuyers. According to a recent survey by the National Association of Home
Builders, the top four reasons homeowners remodel is to obtain more space, avoid
buying a new home, enjoy more amenities, and adjust to lifestyle changes.
Question: What should I weigh before considering an addition to my home?
Answer: Thoroughly assess your space. You may find you have the room you need,
particularly if there is unused or under utilized areas in your home. Perhaps a
garage, attic, side porch, or basement can be converted to fit the use you have
in mind. Or, maybe, a small area can be carved from a larger area like a kitchen
or living room to create a powder room. These improvements are certainly cheaper
than a major construction job.
Question: What should I consider once I decide to add on?
Answer: If you must construct new space, ask yourself the following questions:
Can I finance the home improvement with my own cash or will I need a loan?
How much equity is in the property? A fair amount will make it that much easier
to get a loan for home improvements.
Is it feasible to expand the current space for an addition?
What is permissible under local zoning and building laws? Despite your deep
yearning for a new sunroom or garage, you will need to know if your town or city
will allow such improvements.
Should I make the improvement myself or hire a contractor?
Question: When should I tackle the job myself or call in the pros?
Answer: A lot will depend on your time, level of expertise or willingness to
handle the job, amount of help from friends or relatives, and how much you want,
or need, to save by doing the job yourself. You could save up to 20 percent of
the project cost through your own hard work. There are several do-it-yourself
books that offer guidance, and some home improvement stores, such as Home Depot,
offer classes that can be helpful getting you on the right track.
Be aware, however, that you may end up spending more time, and up to double your
estimated budget, if problems arise. Also, you may have difficulty selling your
home if the workmanship looks shoddy. Unless you are very experienced, home
improvement experts suggest that you stick to painting, minor landscaping,
building interior shelving, and other minor improvements.
Remember, too, that you may need to deal with local agencies to get permits,
inspections, variances, and certificates of occupancy.
Question: Are there ways to save money when adding new space to my home?
Answer: The direction in which you build can make all the difference. Experts
say building up is normally less expensive than building out on the ground
level. Adding an expensive wing or addition requires a new foundation. It is
less costly to extend plumbing and other mechanical systems upward, as opposed
to installing new ones. So using the "air rights" over your house may be your
Question: What kind of return can I expect from home improvements?
Answer: Some improvements offer a greater return than others do. This will vary
greatly depending on the type of work you have done. Remodeling magazine
publishes an annual "Cost vs. Value Report'' that can answer this question in
more detail, based on the top 15 home improvements. A recent study it conducted
says the highest remodeling paybacks have come from siding and window
replacements, major kitchen remodeling, bathroom and family room additions, and
mid-range master bedroom suites.
Question: Is there such a thing as "over improving"?
Answer: Yes. The last thing you want to do when undertaking a home improvement
is go overboard. This means fixing up the home to the point where it becomes
worth far more than nearby neighborhood properties. Down the road, when you may
want to sell, potential homebuyers will be reluctant to pay, say, $200,000 for
your home when others are priced at $150,000. If they want to pay that kind of
money, they will likely make a purchase in a neighborhood where most of the
homes sell in that price range. Carefully measure the cost of any improvements
you want to make against the overall values in your neighborhood. Otherwise, you
may not recover your costs or increase your property value significantly.
Building Permits and Zoning
Question: What do zoning regulations do?
Answer: Zoning is the government's way of controlling the physical development
of land and the kinds of uses to which each individual property may be put. Zoning regulations establish how the land can be used, either for residential,
industrial, commercial, or recreational purposes - although they also can allow
for more than one use in a given jurisdiction. Designed to protect you, your
neighbors, and the community from undesirable, or inappropriate, land uses
and/or construction, zoning laws in many communities can be very rigid and
inflexible. On the other hand, they can protect your property value and give you
peace of mind. This is particularly true in instances where the community
debates whether to locate a prison in your neighborhood or a neighbor illegally
builds a second story onto his home that blocks your view of the lake or
mountains. Before you begin any remodeling jobs, determine how your local zoning
laws might affect your project.
Question: How can I find out how my property is zoned?
Answer: Zoning ordinances and maps are a matter of public record. Visit your
local zoning office, city hall, or some other local planning board and get a
copy of your local ordinance.
In some areas, if you have a legal description of the property (name, address,
tax map, and parcel number), you can call the zoning office or city hall, or
even e-mail your request for information. Some communities also have their
zoning maps and ordinances online and in local libraries.
Question: What is a variance?
Answer: It is a request made to your local jurisdiction to deviate from current
zoning requirements. If granted, a variance will allow you to use your land in a
way that is normally not permitted by the zoning ordinance. However, do not view
a variance as something that changes the zoning law because it does not. Rather
it waives a certain requirement of the zoning ordinance. For example, it may
allow the owner of an odd-shaped lot to reduce slightly the setback requirements
in order to accommodate a building, or permit the building of a gazebo in the
Question: How do building codes work?
Answer: Building codes set minimum public-safety standards for such things as
building design, construction, use and occupancy, and maintenance. The codes are
established and enforced by local politicians and government officials, who also
tend to modify them constantly. The codes are usually enforced by denying
permits, occupancy certificates, and by imposing fines.
While codes vary from one state, county, city, and town to the next, specialized
codes generally exist for plumbing, electricity, and fire. Each usually involves
separate inspections and inspectors.
There are building codes for most remodeling jobs. So if you have done
significant remodeling, make sure you save proof of the permits involved in the
project. There is a good chance potential buyers may request them. Failure to
obtain the appropriate permits before you undertake a project could later result
in fines or other serious consequences, such as having a structure ordered to be
torn down because it was constructed improperly.
Question: Should I always get a permit before making home improvements?
Answer: To save both time and money, some people avoid getting building permits. But most cities require them. Besides ensuring safety during construction -
housing inspectors sometimes stop by to check on the progress of projects at key
points - they are also a source of revenue.
Cities charge a fee when a building permit is issued. Also, work done with a
building permit can result in an increase in the homeowners' property taxes
because, in general, a home improvement increases the assessed value of the
Permits are usually required when any structural work is planned or the basic
living space of a home is altered. They generally cover new construction,
repairs, alterations, demolition, and additions to a structure. Some
jurisdictions require the permit to be posted in a visible spot on the premises
while the work is being done.
Besides structural changes, permits also may be needed to cover the installation
of foundations for tanks and equipment, as well as the construction or
demolition of ducts, sprinkler systems, or standpipe systems.
By law, all buildings must have a building permit and a certificate of occupancy
before they can be used.
Question: Are there different types of contractors?
Answer: Home improvement professionals vary. Who you hire also will depend
largely on the size and complexity of your project. What follows is a brief
description of the different contractors who do work for homeowners:
General contractors - they manage all facets of the project, including hiring
and supervising subcontractors, obtaining building permits, scheduling
inspections, and working with architects and designers.
Specialty contractors - these are the folks who install products, such as
cabinets, bathroom fixtures, and bookshelves.
Architects - they design homes, additions, and major renovations.
Design/building contractors - they offer one-stop service and will see your
project through from start to finish.
Question: What guidelines should I use to find a contractor?
Answer: Use caution. Your home is your most valuable financial asset. You will
want someone who completes the job, not botch it up. It is important that you
find a competent and reliable contractor who will successfully complete your
home improvement project. Here's what you can do:
Avoid the Yellow Pages. Check with family, friends, neighbors and co-workers for
Contact local trade organizations, such as the local Builder Association or
Remodelers Council, for the names of members in your area.
Deal only with licensed contractors. The state licensing board and local Better
Business Bureau also can tell you if there are any outstanding complaints
against the license holder.
Interview each contractor, request free estimates, if possible, and ask for
recent references. Make sure bids are based on similar project specifications.
And do not automatically settle for the lowest bid.
Ask for proof of worker's compensation insurance and get policy and insurance
company phone numbers so you can verify the information. If the contractor is
not covered, you could be liable for any work-related injury that takes place
during the project. Also check to make sure the contractor has an umbrella
general liability policy.
Question: How do I avoid being ripped off by a less than reputable contractor?
Answer: According to the Federal Trade Commission, there are several ways to
spot less than reputable contractors because these hucksters tend to do the
for an immediate decision.
Ask you to
pay for the entire job up-front.
exceptionally long guarantees.
to have materials left over from a previous job.
Ask you to
get the required building permits.
Not list a
business number in the local telephone directory.
discounts for finding other customers.
Suggest that you borrow money from a lender the contractor knows, which could
make you the target of a home improvement loan scam - a sure way to lose your
Question: What if the job is botched?
Answer: If you are displeased with the results for obvious reasons, keep after
the contractor to make the needed repairs. When that fails, contact your local
consumer protection agency. Make sure you have a copy of the contract, receipts
showing payments, and photographs of the work. Although it has no legal
authority, you also may want to contact the Better Business Bureau, as well as
your state's Contractor License Board. And you can take the contractor to Small
Claims Court to recover amounts usually under $5,000.
Question: Are there ways to save money when using a contractor?
Answer: Chances are you will have to pay the going rate for contractors in your
area. Architects or designers will typically cost 12 to 20 percent more. But
remember you will want a home improvement that is done right the first time. That said, there are still ways you can save if you do decide to work with a
Shop around for the most reasonable bid - not necessarily the cheapest.
Ask friends and family if the contractors they refer stuck to budget.
Root out hidden costs written into contracts.
Insist that trade discounts on materials be passed on to you, or buy materials
Compare payment alternatives - flat vs. hourly rates, for example - and
negotiate the more reasonable of the two.
Do part of the project yourself, such as some disassembly or prep work.
Financing Remodeling Projects
Question: How can I finance work needed on a fixer-upper?
Answer: According to the Millennial Housing Commission, few lenders are willing
to administer home improvement loans. Most prefer to make home equity loans or
unsecured consumer loans because they are easier to manage. Home improvement
loans usually require inspections and irregular draws on the loan amount as work
is completed, which requires regional or national lenders to find local partners
to provide oversight.
Financing repairs and improvements with home equity is okay for most homeowners,
but it is difficult for many first-time buyers. They have lower-incomes, smaller
savings, and have made lower down payments on their homes than first-time buyers
a decade ago. So they have little equity to borrow against. Unfortunately, it is
often lower cost older homes purchased by first-time buyers that need the most
Unless you have a cash reserve, you will have to shop around for the best
borrowing terms. In addition to the options listed above, you can ask relatives
for a loan. Borrow against your whole life insurance policy. Refinance your
existing mortgage and take out cash. Get a second mortgage. Contact the
government about home improvement programs. And - as a last resort - borrow from
a finance agency, which generally charge high rates.
Question: How does refinancing work?
Answer: With a refinancing, you pay off an old loan on your home and take out a
new one, usually at a lower mortgage interest rate. To refinance, you will
generally need to have equity in your home, a good credit rating, and steady
income. You can borrow a percentage of the equity to cover remodeling costs,
debt consolidate, and college tuition. When you refinance, you will incur all
the closing costs that go along with getting a new mortgage. So unless you're
doing extensive renovations and can get a mortgage interest rate at least two
points below your current loan rate, you may want to select another financing
Question: What about a second mortgage?
Answer: It is a loan against the equity in your home. Financial institutions
will generally let you borrow up to 80 percent of the appraised value of your
home, minus the balance on your original mortgage. You may incur all the fees
normally associated with a mortgage, including closing costs, title insurance
and processing fees.
Question: Is a home equity line of credit similar to a second mortgage?
Answer: A home equity loan, like a second mortgage, lets you tap up to about 80
percent of the appraised value of your home, minus your current mortgage
balance. But because it is set up as a line of credit, you will not be charged
interest until you actually make a withdrawal against the loan, although you
will be responsible for paying closing costs.
The withdrawals can be made gradually as you begin to pay contractors and
suppliers for handling your remodeling project.
The interest rates on these loans are usually variable. Of particular
importance: make sure you understand the terms of the loan. If, for example,
your loan requires that you pay interest only for the life of the loan, you will
have to pay back the full amount borrowed at the end of the loan period or risk
losing your home.
Question: How does an unsecured loan work?
Answer: The interest rates on these loans are often higher than on secured loans
and you generally will not be able to get a tax deduction for the interest paid.
However, the costs to obtain an unsecured loan are usually lower. And the
relative ease of getting this type of loan makes it popular for small projects
costing $10,000 or less. The lender evaluates applications based on credit
history and income.
Question: Does the federal government offer home improvement programs?
Answer: Yes. Among the most popular:
Title 1 Home Improvement Loan. HUD insures the loan up to $25,000 for a
single-family home and lenders make loans for basic livability improvements -
such as additions and new roofs - to eligible borrowers.
Section 203(k) Program. HUD helps finance the major rehabilitation and repair of
one- to four-family residential properties, excluding condos. Owner-occupants
may use a combination loan to purchase a fixer-upper "as is" and rehabilitate
it, or refinance a property plus include in the loan the cost of making the
improvements. They also may use the loan solely to finance the rehabilitation.
VA loans. Veterans can get loans from the Department of Veterans Affairs to buy,
build, or improve a home, as well as refinance an existing loan at interest
rates that are usually lower than that on conventional loans.
Rural Housing Repair and Rehabilitation Loans. Funded by the Agriculture
Department, these low-rate loans are available to low-income rural residents who
own and occupy a home in need of repairs. Funds are available to improve or
modernize a home or to remove health and safety hazards.
Question: What about state and local governments?
Answer: Just about every state now offers loans for renovation and
rehabilitation at below-market interest rates through its Housing Finance Agency
or a similar agency. Call your governor's office to get the name and phone
number of the agency in your area.
At the municipal level, many cities also have programs for special improvements
to certain blocks and neighborhoods they are trying to spruce up. Call City
Hall, as well as a Community Development Agency in your city.