Real estate: Financing a remodeling project
Now that spring has sprung, many homeowners are starting to think about redecorating that spare bathroom or adding a home office, said Kate Rooney in CNBC.com. Housing experts say 2017 looks set to be a “banner year” for the renovations market, thanks to rising home prices and Millennials eager to improve their first homes. Homeowners ages 25 to 34 spent an average of $26,200 last year on upgrades, 7 percent more than they did in 2015, according to a survey by the home design site Houzz.com. Baby Boomers who are electing to “age in place” are also driving the renovations boom, said Joyce Rosenberg in the Associated Press. Home remodelers say they are increasingly getting business from people ages 55 and over who want to make their surroundings “easier to manage and safer in case they have health problems.” Popular projects include widening doorways, changing kitchen layouts, and replacing bathtubs with walk-in showers.
With interest rates on the rise, homeowners looking to remodel “should carefully consider their financing options,” said Ann Carrns in The New York Times. The housing market’s recovery means more homeowners have equity they can tap to pay for projects. But with the average 30-year fixed-rate mortgage at just over 4 percent, up from 3.6 percent a year ago, cash-out refinancing “is becoming less attractive.” Instead, home-equity lines of credit are becoming increasingly popular. They can be “complex to manage,” however, and “come with variable interest rates,” which means your monthly payments could rise. Even if you have funds to pay for a renovation out of pocket, charging some of the costs to a credit card “isn’t the worst idea,” said Kelli Grant in CNBC.com. That’s especially true if you can “snare a zero-percent offer” on a new card and pay off the balance before the promotion expires. Charging big expenses, like materials, on a rewards card also offers an extra layer of purchasing protection, and the chance to rack up enough points “to cover, say, your next vacation.”
Remodeling a kitchen is one of the most popular—and costly— projects, said Debbie Carlson in the Chicago Tribune. The price tag for a typical kitchen overhaul in 2013 was more than $27,000. To trim costs, experts advise sticking with your current floor plan, so you won’t have to pay to move the plumbing and electric. The two areas “worth a splurge” are cabinets and countertops. A local cabinet supplier will be more expensive than a big-box retailer, but you’ll be able to “design creative storage” that better fits your home’s layout. And most remodelers will tell you to opt for natural stone counters over manufactured styles. “Not only do they look beautiful, but they will last for years.” ■