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Home improvement financing, proper planning can ensure a successful remodeling project

Posted on Monday, March 10, 2014 at 9:03:04 AM

Homeowners are expected to spend more on improvement projects throughout 2014, according to a recent report from the Joint Center for Housing Studies of Harvard's Leading Indicator of Remodeling Activity. Double-digit gains are predicted, and better housing market conditions may have contributed to the rise in remodeling activity this year.

Recently, Home Loan Investment Bank's Brian Harvey offered some tips, tricks and pieces of advice for homeowners interested in affordable home improvement financing. Since gains in this sector are linked to the housing market, he noted some ways to bolster personal finances to support any undertakings.

"There are a few simple steps to help ensure that your personal finances are in order and can support a new project," he explained. "Start by obtaining a copy of your credit report and knowing not only what your score is but what potentially harmful information is reporting. If there are items that need to be addressed you can clear these up prior to applying for financing to help give you the best opportunity of getting approved."

Following this step, Harvey recommended that homeowners determine the cost of their project. 

"It is very helpful to get comparison quotes from multiple sources to see what the range of pricing is for your project," he noted. "Also, be prepared to ask questions and to check references. The more information you have will allow you to make an educated and confident decision. Research what loan programs are available to help find the best option. Before applying, ask questions regarding what it takes to qualify, what the terms of the loan are and what the time frames are. And also be sure to give yourself enough time to not only apply for the loan but for the loan to fund as well. Many lenders can give a quick response on approval or qualifying but it can take several days to several weeks to actually have access to the loan proceeds."

While access to home improvement financing can be extremely beneficial, there are still limits to what homeowners should be willing to tackle. A smart choice here can pay off big at the end.

"These are repair and maintenance projects that must be done to maintain the functionality and integrity of your home," explained Harvey. "These projects entail window repair and replacement, heating and cooling, electrical, roofing, gutters, and so on. These are the type of projects that must be kept up to maintain the livable quality of the home, but a potential buyer also expects a home with solid structure and systems."

In addition, projects should aim to boost equity and add square footage, he continued. This can range from adding a bathroom to an extra bedroom if a home is lacking. However, some ideas can be a waste of home improvement financing.

"The type of projects that can be put off until later are luxury items such as a swimming pool, sauna and home theater, to name a few," Harvey concluded. "These type of projects may help entice a buyer, but in a neighborhood where they are not common they will not necessarily help boost the home's equity. These types of projects are for the pleasure of the existing homeowner to help them enjoy their space. The advised approach would be to do these projects as long as you have the disposable income to save or pay for the projects while maintaining the ability to do the improvements that are necessary and beneficial to the home in general."