Home improvements: What do you need, how much you can afford and who will do the work?
You can make the most out of your next home improvement project by doing a little “home-work” first.
Home improvements are an important part of being a homeowner. In addition, home improvements can have many benefits. They help protect your investment, can raise neighborhood standards and even property values. Before taking on a new home improvement project, consider your wants versus needs, how much you can afford and how you will get the work done.
For some, home improvements might be regular maintenance issues and for others they might be upgrades or new additions. The National Center for Healthy Housing has developed a Healthy Homes Maintenance Checklist which provides homeowners with basic guidelines for regular home maintenance. This might be a helpful tool when ranking your next home improvement as a want or a need. Other considerations might be the lifespan of major home appliances or structures such as a roof.
When deciding how much you can afford, a good place to start is to review your budget. If you do not have a budget in place, visit MI Money Health for more information on creating a budget and financial goal setting. In addition, Michigan State University Extension recommends that homeowners save three percent of their home value each year for home maintenance and repairs.
There are many ways to pay for home improvements. The least expensive way is to pay with cash. Borrowing is another option, and could include obtaining a loan from a bank or credit union. If you choose to take out a loan, be prepared for an approval process and loan terms that you must agree to before singing the note. Make sure that you understand all of your loan options and associated fees before making your final decision. While credit cards are another option, it is encouraged that you use caution with this approach due to interest rates. Another option is an FHA Title I Property Improvement Loan. Lenders also offer these, and they can be used for a variety of improvements, including accessibility issues and energy conservation issues. In addition, an FHA Title I Property Improvement Loan can be issued on a do-it yourself basis or through a contractor or dealer. For more information on the FHA Title I loan call HUD’s Customer Service Center at (800) 767-7468 (TTY: (800) 877-8339).
Once you have chosen your next home improvement project and decided how much you can afford, then there is the decision of who will do the work. If you have the appropriate tools and experience, do-it-yourself projects can certainly save money. However, if you are not skilled in the areas of wiring, plumbing, installing heat systems and cutting through walls, then it is recommended that you use professionals for these types of projects. If you decide to use a contractor, it is suggested that you consider the following:
- Choose one that has a reputation based on honesty and good workmanship: i.e. consult your local Chamber of Commerce, Better Business Bureau, State Attorney General or local Consumer Protection Agency
- Seek references from previous clients
- If your contractor is arranging the financing of your loan, contact the lender they use to inquire about their history with that lender
- Consider getting two or three bids from different firms, and make sure that the quotes are for the same project specifications and grades of material
- Understand the contract before you sign it.
For more information on selecting a contractor, including how to avoid fraud, visit HUD.
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