Aug
20
2008
0

How to Choose Energy Efficient Windows

A typical NFRC window label gives you the information that you need about window performance.

A typical NFRC window label gives you the information that you need about window performance.

Picture of a typical NFRC window label – Snagged from the NFRC website.

Almost everything you need to know about windows can be found on the NFRC label that comes on the window, and your window dealer should be able to furnish you with this information before you place your window order.
What you will find on the NFRC label (more…)

Jul
31
2008
3

Financing a Home Improvement Project

Improving or updating your home – whether it is an addition, updating a kitchen or bath, or finishing the basement – improves your quality of life and increases the resale value of your home. These kinds of projects can cost tens of thousands of dollars, but there are several financing options available. To choose wisely you need to consider several factors:

  • how much you need to borrow.
  • how much equity you currently have in your home.
  • how much value your project will add to your home.
  • whether you need the money all at once or would prefer to draw on it as necessary.
  • whether you want to make amortized payments or follow a more flexible schedule.
  • your comfort level with placing a second mortgage on your home.

Your first steps should be to get pre-approved by a lender to determine how much you can spend, and to get an estimate from a qualified contractor to determine if your project is feasible with the financing that is available to you. Then here are your financing options:

A home equity loan

Works much like a conventional mortgage. You borrow a lump sum that is secured against your home, and is repaid over several years. Usually, the interest rate and monthly payment usually remain fixed throughout the term of the loan. This option requires an additional payment on top of your first mortgage and usually carries a higher interest rate than refinancing your mortgage. However, the closing costs may be lower and it can be right if you prefer not to refinance and you need the money for your renovation all at once.

A home equity line of credit

A HELOC is a good choice if you will need to pay for your project in stages. In this case, the lender agrees to advance you money up to a specified limit, and you access the money as needed with an ATM card or checking account, making it easy to pay contractors. Monthly payments can be lower than those of a home equity loan, since you have the option of paying interest only on the money you withdraw. The other important difference is that HELOCs carry adjustable interest rates, while home equity loans typically have fixed rates.

Refinancing your mortgage

An option to consider if you already have equity in your home and you are planning a major renovation. For example, if you want to borrow $45,000 to build an addition and you have $120,000 left to pay on a $200,000 mortgage, you may be able to take cash out by raising the principal on your mortgage to $195,000. This would allow you to pay for the entire renovation up front. Depending on the terms, your monthly mortgage payment might remain the same; only the length of the loan will be extended. If your project will be an addition (as opposed to simply redecorating) lenders may approve you based on the projected value of your home after the project is complete.

A personal loan or line of credit

May be all you need for a smaller project. The fees to set these up can be lower than those for refinancing your mortgage or your equity. The drawbacks? Personal loans are not secured with your home, so they carry a higher interest rate. But depending on the rate, they are usually more economical than using a credit card. However, interest on your mortgage or home equity loan may be tax deductible whereas interest on a personal loan is not.

Jul
31
2008
1

Choosing a Contractor

Full Disclosure – I’m a general contractor. I’ve worked in both the custom and speculative markets for clients and for myself. This article is based mostly upon my opinions and experience, but it also reflects a consensus from within my community. If you don’t get anything else from it just remember one thing – Check References – if you do that you will be way ahead of the game.

Before you can choose a contractor you will need to decide what Kind of contractor you want, and why. At one end of the spectrum of contractors you have the Full Service General Contractor. The Full Service General Contractor does way more than just construction. They also:

  • Produce a detailed proposal, and firm price that will be very helpful for securing project financing.
  • Manage specialty tradesmen such as electricians, plumbers, tile setters, etc
  • Manage and usually furnish general construction workers who will perform tasks that are difficult to sub-contract out like foundation lay out, clean up, general labor, as well as specialty skilled trades when sucuring a specialized subcontractor isn’t appropriate.
  • Furnish workman’s comp, general liability, and sometimes builders risk insurance
  • Manage payroll for everyone who works on the job
  • Procure and manage materials
  • Pull building permits
  • Deal with codes inspectors
  • Plan and Schedule all of these elements as well as keep You the customer on schedule “time to get that light picked out!”
  • Quality assurance – make sure that everyone is doing a good job
  • Incur liability – For example if your house burns down because of faulty wiring, the general contractor will incur the liability for negligence (if it was involved) in case the electrician is unable to for any reason. This is a major reason why a full service contractor costs more.
  • Contract with you to do your project for a firm price or at least a well estimated one.
  • Furnish a warranty – if you act as your own contractor you will usually not get much if any warrantability from tradesmen.
  • The General Tradesman

    On the other end of the spectrum of contractors you have the General Tradesman. The General Tradesman will generally perform all or most of the construction personally or with the help of 1-3 others. This crew will work on your job pretty much continuously from start to finish. Other than construction the General tradesman may not do any of the other things that a Full service contractor does. They may Only work by the hour or on a “cost plus” basis, making the final cost pretty hard for you to predict. They will probably want to be paid up to current once a week. The General tradesman may not be licensed or insured, which may or may not be quite legal.

    If you hope to have minimal dealings with managing your project (from planning to warranty) then you probably want a full service general contractor. If you don’t mind being a lot more hands on then you might consider a Tradesman type contractor. Or you might accept something in between (remember, it’s a spectrum).

    Now, here is the most important part: Check their References. Talking to recent past customers is without a doubt the best way to find out what you are getting into. Both types of contractors have their own inherent advantages (which should be obvious). But if you check their references, you will know what to expect. If a contractor won’t or can’t furnish references then don’t even consider them.

    The next most important thing is to get a written contract that specifies exactly what you and your contractor are agreeing on, no matter what type of contractor you hire.

    Keep in mind that you get what you pay for – or at least you don’t get what you don’t pay for. Any Contractor is obligated to perform the work in a competent manner, but if you hope to get other services then you should expect to pay for them. In other words, a full service contractor will probably cost more than a tradesman, but for more money you should also get more service.

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