DIY Network

Bang for Your Buck Renovations Matt Heimer shares financial tips on renovating your home. From "Home Made Easy" episode DHME-113

Guest Matt Heimer joins host Stephanie Lydecker and outlines what to expect when you decide to renovate your home. He discusses what areas are good investments to concentrate on and what areas can be potential pitfalls.

He suggests that you get a home equity loan or refinance your mortgage before you renovate

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Matt shares tips about renovating your home.

Bang for Your Bucks Renovations

• Renovating your home tends to pay off in the end because home improvement increases the value of your property, which means the project eventually pays for itself. Making renovations is also a lot cheaper than buying a new house. Just as important are the advantages to making changes in your home. You can have more space or give an old space a new look which refreshes the home. But before you start, you need to consider how you will finance your renovations and decide whether to make large or minor improvements.

• Renovations aren't cheap. A full kitchen set of cabinets alone can cost $8,000. But there are ways to save. For example, you can buy new bathroom and kitchen fixtures from home supply stores yourself instead of having them custom built.

• You also have to decide whether you are going to do these renovations yourself, hire a contractor, or some of each.

• Since you don't want to scrimp on construction, you will most likely need some cash. So, you'll have to get a home equity loan, or do a refinance which replaces your current mortgage with a larger one that would include your renovation costs. What kind of loan you get should depend on interest rates; the lower, the better. Sometime refinancing has lower rates, other times home equity loans do. Home equity lines of credit are a particularly good option because they're flexible--you can go back and borrow more money without having to reapply for another loan.

• When looking for a contractor, ask friends and neighbors for suggestions. Make sure you check references and remember that old references are just as important as new ones. You want to make sure that a house that a contractor once worked on is still standing strong. Be wary of a contractor who is immediately available to start; they can't be that good if they can just jump on the job right away. Get at lease three proposals/estimates from different contractors.

• Prior to signing a contract, agree to a payment plan that is fair and equitable to both parties on the job--like a third up front, midway and upon completion. Doing it yourself can save you a lot of money, but it all depends on what you capabilities are. Be prepared that contractors tend to be very slow and the process of the renovations can be stressful. Know that you have to be your own head contractor and stay on the case to keep things moving, but the end result will hopefully make it worthwhile.

• What are the additions that might be a bad idea? Gazebos, mazes, musical foundations or exotic animal enclosures aren't practical ways to spend your money if you are hoping to make your improvement for a resale. Spending $50,000 on a lap pool is going to be a waste of money. Other unpopular choices are faux replacement windows and kitchens where "miles and miles" of cabinetry have run amok. Be careful not to overcrowd a room/space. Don't remodel a space that is already small like a bathroom with too much. You should also respect and stay consistent with the character of your house. If the house originally had molding, it should remain. If you re-do the exterior so that your house stands out like a sore thumb, you will definitely hurt its resale value. Leave the hot pink in the paint can!

• Landscaping is a great way to boost value into your home and it also dramatically changes the look of your property. A fresh coat of paint on the walls can spruce up a room. Changing your windows is a quick and inexpensive change you can make. You can change the style of the windows or get windows that do more to keep cold air from coming in. You can also change your appliances in your kitchen; get a new stove or refrigerator.

• Many of these renovations will pay for themselves by being energy efficient. Change the siding on the house. Just remember to keep your choices on the tame side. You can also sand or wax your floors if they are wood. You could put a garage door opener in. The possibilities are endless.

GUESTS :

Matt Heimer
Senior Editor, Smart Money Magazine
Website: www.smartmoney.com