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FALL HOME IMPROVEMENT SUPPLEMENT
8
How To Pay For HomeJmcrovements
(MS) - Home improvements can be necessities or
luxuries, adding value to a home or simply malting it
more habitable. One thing that all improvements have in
common is that they cost money.
In a perfect world everyone would have the proverbial
money tree growing in their yard that could finance
renovations. However, in reality, this isn’t the case.
Therefore, if one doesn’t have the up-front funds necessary
to finance a project, some sort of financing from an
outside lender will be necessary. Be warned that there are
smart and not-so-smart ways to pay for improvements,
Here’s a look at both.
Before taking out any loans or financing, it’s best to
examine your overall financial picture. How does this
improvement fit in with your current situation? If it’s
already tough to make ends meet, renovation expenses
are probably not the best idea. Ideally you should have
a three-month cushion of savings in the bank, already be
contributing to a retirement or education plan, and not
have renovations interfere with these obligations.
SMARTEST OPTIONS
The smartest ways to finance improvements are through
methods where you’ll receive tax deductions or pay as
little interest as possible. Borrowing against the equity in
your home is one of the best ways to achieve this. Here’s
a look at your choices:
• Home-equity loan: This is good for a one-time
remodeling project. The amount you borrow and the
interest rate are fixed at the start of the loan. These loans
typically last 5 to 30 years and may have closing costs
ranging around SIOOO.
• Home-equity line of credit (HELOC): HELOCs
operate similar to a credit card. You borrow only the
amount you need to finance against the equity in your
home. The downside is that HELOCs usually feature a
variable rate, so you have to be prepared to be able to
continue making payments even if the interest rate rises
sharply. Interest payments are tax-deductible, and closing
Protect Your Home
(MS) - Snow, ice, sleet, and rain can cause damage to the
exterior of your home. Surfaces where water collects - like
window sills and railings - are especially prone to water
absorption, which can lead to peeling paint, wood rot and the
growth of mold and mildew, if left unprotected.
So why not protect your home against water damage before
the wet winter weather sets in? Thanks to new technologies,
it’s as easy as applying a fresh coat of paint. Here’s some
advice from the experts at Zinsser:
• Scrape and remove peeling or chipping paint. Sand rough
edges and clean the area thoroughly to remove dirt, dust and
other contaminants. Remove and kill mold and mildew with
an EPA-registered cleaner like JOMAX House Cleaner and
Mildew Killer.
• Apply a high quality exterior primer, like Bulls Eye 1-2-3
Primer Sealer, to seal the surface, block stains and create a
sound base for your paint to adhere.
• Select a quality exterior latex paint in the color of your
choice and add a water repellent formulated to be mixed with
paint, like OKON Paintßooster Water Repellent Additive,
to prevent water absorption and extend the life of your paint
cost fees are very low, typically around SSO.
• Cash-out refinancing: With this scenario you replace
your existing mortgage with a larger one, using a portion
to pay off the first mortgage and then the balance to pay
for renovations. Typically this is only a good choice if
interest rates have dropped or you’ll be in the home long
enough to recoup the financing costs.
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• Borrow against 401 k plans: The advantage to this is
that you pay back yourself rather than a bank. However, if
you lose your job or leave before the loan is satisfied, you
will be required to pay it back quickly or face penalties.
RISKIER OPTIONS
Some people do not have adequate equity or retirement
plans that they can borrow against. Therefore they must
look to other methods. Use caution when borrowing
money and have all of the terms spelled out, otherwise
you could end up over your head.
• Construction loans: Construction loans are okay if the
scope of your project is so involved that you need ample
funds. These short-term, interest-only loans are designed
job. Just one quart of Paintßooster mixed with one gallon of
latex paint prevents melting snow, ice - even wind driven rain
- from penetrating and damaging exterior surfaces. It helps
prevent wood rot and peeling paint on wood surfaces, so it’s
great for use on siding, doors, trim, and surfaces where water
collects, like window sills. It’s equally effective at preventing
the damaging effects of water absorption on masonry - like
brick, stucco and concrete. Paintßooster resists dirt build up
to keep your paint job looking clean and fresh for years - and
because it can also be added to any latex stain, it can be used
to prevent water damage on fences, decks, outdoor furniture
and more.
For more information on OKON Paintßooster and
protecting your home against water absorption, visit www.
okoninc.com.
Applying a fresh coat of paint to window sills
and railings can protect against water damage.
to be replaced by a regular mortage once flfe project is
completed. They’re based on the costs of construction, or
the future value of your home, or both.
• Home-improvement center project cards: Many
chain home-improvement centers have their own credit
cards that feature promotions and 0 percent interest for
an introductory rate. If you can pay back the amount
charged in a 6-month or less period of time, these are a
good option. But they can prove costly if you exceed the
pay-back time and start accruing 18 percent interest on
purchases.
• Credit cards: Credit cards can be risky if you are
not able to pay off the renovation purchases right away.
Financing your homo improvements can he
risky; so check out the various methods of fi
nancing to find the best one to fit your finan
cial situation and remodeling needs.
Otherwise, high interest rates or teaser rates that spike
unexpectedly can end up costing you much more than
you intended.
• Contractor loans: Beware of loans that are supplied
through a contractor. He may offer you a great deal
on financing that turns out to be a scam. Look for an
independent lender instead.
• Margin loans: You can borrow against the value of
your investments with many brokerage houses. But a
sharp drop in the market could result in a “margin call.”
That means you either pay the loan back instantly or the
brokerage sells the investments that secured the loan.
A financial expert can walk you through the other
benefits and downsides of these financing options. Just
keep in mind that financing and the economy work hand
in hand. In a sluggish economy, lenders will be less likely
to go for risky loans and may scrutinize your application
much more thoroughly than in a booming market.
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OCTOBER 2007