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Flik Chik
Citizen
Username: Flikchik
Post Number: 94
Registered: 3-2004
| | Posted on Tuesday, January 4, 2005 - 3:39 pm: | 
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What is the best way to pay for a remodel?
Does it make sense to pay from our earnings for next year considering we don't want to take out a home equity loan? We could pay for it with our proposed savings but does this make any sense?
This is our first major expenditure on the house after moving in almost a year and half ago.... |
cmontyburns
Citizen
Username: Cmontyburns
Post Number: 603
Registered: 12-2003
| | Posted on Tuesday, January 4, 2005 - 3:49 pm: |
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This doesn't necessarily answer your question, but I think everyone should have an active Home Equity Line of Credit. Rates are still incredibly low, and you only pay interest on the money you actually choose to use. Fleet is one of the best banks around to get a "heloc" from, as you will pay absolutely $0 for it, and you'll get a great rate -- plus you save another 1/4 point on the rate if you're a fleet/bank of america customer.
A home equity line is a very good "safety net" to have. Plus, if you want to buy another home in South Orange/Maplewood, you'll find that many realtors will tell you to secure a Heloc. This is because you may find the need to front a tremendous amount of money before you home sells.
The risks of Helocs, as opposed to a straight home equity loan, are primarily in that they have a variable interest rate. The rate is pegged to the prime rate, which still remains extremely low by historical standards.
We just finished a major kitchen renovation, with about 50% of the money coming from our Heloc. Obviously it's a personal preference, and if you don't want to go into debt, I'm not sure you have any options other than to just save your money.
A kitchen renovation will dramatically improve the market value of your home, and I think it's a "smart" use of a home equity line of credit. (It's also a tax-advantaged use.)
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Earlster
Supporter
Username: Earlster
Post Number: 818
Registered: 8-2003
| | Posted on Tuesday, January 4, 2005 - 4:05 pm: |
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I second Monty. We suddenly needed a new roof and it wasn't in our budget. Got a HELoC from Fleet (BofA), great rates, and you get a quarter point off, for auto withdraw from their checking, as well as another quarter point if you take out more then 25k in the first 3 month, even if you pay it back right after the 3rd month.
You can fill out an application at their web site, but I would urgently recomend going to the branch if you can make the time. I worked with Brendon B. at the branch in MWD Village, who was great, after initially applying online and having to follow up via phone, since they never informed me that it got approved. |
jrbell
Citizen
Username: Jrbell
Post Number: 165
Registered: 10-2003
| | Posted on Tuesday, January 4, 2005 - 4:24 pm: |
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Third this recommendation. We used our line of credit to pay for about 60% of our recent kitchen renovation and paid for the rest out of earnings/savings.
In addition to serving as a great safety net, I understand that the line of credit (if unused) can actually benefit your credit score because your rating is influenced by the amount of credit you are using vs. the amount of credit you have in your name. If you have a 100k LOC that is not being tapped, this makes it look like you have a lot of open credit, which is a good thing (I think). |
alan
Citizen
Username: Alan
Post Number: 151
Registered: 11-2001
| | Posted on Tuesday, January 4, 2005 - 4:47 pm: |
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You can great deals and they are good if you are responsible. the reason they are such good deals is so many people take the cash and go to vegas or tahiti or whatever. |
1-2many
Citizen
Username: Wbg69
Post Number: 925
Registered: 6-2002
| | Posted on Tuesday, January 11, 2005 - 2:48 pm: |
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OT - jrbell - minor point - open credit is actually not a good thing for credit scoring - it represents a risk to potential lenders.
the more open credit, the greater the risk.
******
my Q on the kitchen remodel, which is what is holding me back, is I bought my house 2.5 years ago, after losing 5 (!) bidding wars. I was determined to win this one, so I paid what I consider a hefty price for the house. I've wondered since then if I paid a reasonable price. and, we bought it knowing it needed, and planning on doing, a full kitchen remodel. even have the $$$ set aside for it. but I am wondering now if it makes sense to put this much more into a house I *may* have overpaid for.
any thoughts? I watch comparable sales to see where I am, but haven't sen enough information to relieve my skepticism. |
Wendyn
Supporter
Username: Wendyn
Post Number: 1240
Registered: 9-2002
| | Posted on Tuesday, January 11, 2005 - 3:01 pm: |
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Only thing I would say about an HELOC is that if your remodel is going to be pricey, and/or you want to finance it over a long term, a loan might be better than a line of credit. Our addition/kitchen renovation is over the $100k mark, and we wanted to finance it over a long term to minimize our monthly payment. We were concerned with how rates might rise in the next 15 or so years so we went with a HEL.
1-2many, I would consider how long you plan on staying in the house. The way the market and public are today, most can see "potential" in a house without a complete renovation. So if you are planning on selling soon I would do some cosmetic stuff (watch Designed to See on HGTV). But if you are thinking long term you want to make the kitchen comfortable for you & your family.
Our addition prices us a bit off of our street, but it makes us comfortable enough to stay there much longer than we would have without it. We figure we are saving money by spending $100k on a renovation/addition rather than $200-300k (that we don't have) on a new house that would probably still need work. |
mammabear
Citizen
Username: Mammabear
Post Number: 165
Registered: 5-2001
| | Posted on Tuesday, January 11, 2005 - 5:19 pm: |
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cmonty- you are totally right about HELOC's - everything you said was right on.
1-2 many- open credit does not necessarily lower your score. If you only have a couple of lines open, a home equity will not impact you. Also, home values went up significantly in SO/M last year and we expect it to continue again this season. Everyone wants to move to our area. Spring 2004's bidding wars mean you should be in the black by now. Remember, your home's value is taken into consideration when you apply for a HELOC or home equity loan. It determines how much of a line/loan they will offer you. Most lenders do not want to exceed 90% loan to value (they only want to lend you up to 90% of your home's current value) Any other questions..let me know. This is my field. |
1-2many
Citizen
Username: Wbg69
Post Number: 926
Registered: 6-2002
| | Posted on Tuesday, January 11, 2005 - 5:28 pm: |
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thanks for the offer, mammabear!
my worry is putting too much money in the house and needing or wanting to sell within the next couple years, and not being able to get a fair amount of it back out. also, the rumblings of the past few years, on the impending burst of the "real estate bubble", factor in.
counterbalancing this, I figure, it will always be a good RE market, 30 min from NYC. and, I didn't realize Spring '04 was also a bidding war year (I know from experience that '03 was, however). was this on *both* sides of town? I live on the "wrong" but in a nice area, imho (Tuscan district, beautiful, stately, low-traffic street). whaddayathink? |
mammabear
Citizen
Username: Mammabear
Post Number: 167
Registered: 5-2001
| | Posted on Tuesday, January 11, 2005 - 6:33 pm: |
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I think every borrower I worked with participated in a bidding war during Spring/Summer '04! Very rarely was there ONE bid on a house. Most houses were under contract within days - first bids were the Sunday night they had their open houses - "best & final" were Monday night. (routine sound familiar?!) It happended over and over. I can recall two houses specifically in your area (Tuscan district, off Prospect, 3/4 bdrm colonials) that went for $580-over $600K with multiple offers. Let me see if I can find a site that offers recent sales in M/SO - it is public record after all. I'll get back to you soon.
Mamma |
1-2many
Citizen
Username: Wbg69
Post Number: 927
Registered: 6-2002
| | Posted on Tuesday, January 11, 2005 - 6:46 pm: |
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you are too cool! thanks a ton for the input! I was poking around today for comparable sales and/or listings and noticed a cute 3/2 Tudor (mine's a Tudor) that was listed for $599. wondered where it was - figurd it was on Wyoming? driving home tonight I actually saw it... on the corner of Yale and SPRINGFIELD! Is the seller crazy or am I in much better shape than I thought?
thanks again for sharing your field experience! |
cmontyburns
Citizen
Username: Cmontyburns
Post Number: 611
Registered: 12-2003
| | Posted on Tuesday, January 11, 2005 - 7:58 pm: |
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You could burn your house to the ground, and the worst real estate agent in town could get $425K for the smoldering ashes. |
Mergele
Citizen
Username: Mergele
Post Number: 236
Registered: 7-2003
| | Posted on Wednesday, January 12, 2005 - 9:39 pm: |
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So right, Cmonty. I just refinanced a couple of weeks back and appraised at nearly $200k more than I paid at the end of 2001. I've put quite a bit in, but I'm still *way* ahead of the game! |
Elzi121
Citizen
Username: Elzi121
Post Number: 41
Registered: 6-2004
| | Posted on Wednesday, January 12, 2005 - 10:16 pm: |
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for actual home sale prices, go to http://www.domania.com |
Zoesky1
Citizen
Username: Zoesky1
Post Number: 614
Registered: 6-2003
| | Posted on Wednesday, January 12, 2005 - 10:28 pm: |
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I agree. I'm not ready to sell my house or anything, but when I obtained a HELOC in November, my house was appraised at almost $100K more than I had paid for it just a year and a half before. And that was BEFORE I redid a bathroom and installed granite in the kitchen, which was done in December and last week. I think home prices in this area just continue to go up. |
knak
Citizen
Username: Knak
Post Number: 102
Registered: 5-2002
| | Posted on Monday, January 24, 2005 - 10:53 pm: |
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Umm.
The real estate boom is not exactly the same on the east side of town. There's one on my block that isn't moving at $329K, offered since the summer. Not gorgeous but not a fire sale either. Several within a couple of blocks have gone for $275-$300K, usually after a few months.
On fixing up fixer-uppers: the $100,000 kitchens mentioned above are worth 1/3 or more of my house & many others. If we spent even 1/3 of that, we'd never be able to get enough back to trade in for another house in Maplewood.
It continues to be better than the mid-'90s but we're still working on moving over $300,000. |
Bobkat
Supporter
Username: Bobk
Post Number: 7347
Registered: 5-2001
| | Posted on Tuesday, January 25, 2005 - 4:52 am: |
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Knak, I believe you live, from previous posts, east of Boyden. Four years ago you could buy houses in that area for under $150,000. If you look at the sales data the Hillcrest, Orchard Park area has had one of the highest appreciation rates in Maplewood since the reval.
I think prices are leveling off and where the real estate agents have tried to push the prices higher than last spring, houses sit for quite awhile. That is the case in most of the town. We had two like that in our neighborhood last fall. |
Mrs T
Citizen
Username: Netjack
Post Number: 8
Registered: 12-2004
| | Posted on Wednesday, January 26, 2005 - 9:31 am: |
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I recently refinanced ny HELOC. The company that has my primary and old Heloc wanted $900 to refi the HELOC by 20k (poss boiler replacement x2, we have a 2 family + upgrades). I called American Express, below prime % and $90 to file at courthouse. So we went for it, 2 weeks later we had it done, and the filing fee changed-to $60!! That was the whole cost to refi and they were great, I highly recomend them!! Good luck. We need a new kitchen but we're going economy but nice-no custom cabinets and granite. |
Dego Diva
Citizen
Username: Fmingione
Post Number: 217
Registered: 12-2003
| | Posted on Friday, January 28, 2005 - 10:34 am: |
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knak,
where on the east side of town? There's a house on my street that just sold for about $600k, and that's at least $100k MORE than what it was bought for, just ONE YEAR ago.
I'm only asking because we just received a bank appraisal at $80k over our purcase price, we bought about a year ago, and we're wondering if people are really buying at these prices. We're deciding whether to do more renovations, or take the money and run. |
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