|By Jim Hulen, North Myrtle Beach Online.comJULY 7, 2010 NORTH MYRTLE BEACH, SC — Low interest rates, material costs, labor prices, and contractor charges along with lengthy times for existing homes to sell converge to make 2010 the best year in years to start that home improvement project. Homeowners should take advantage of these factors even if they have to finance the project.
Reflecting this mood, Home Depot and Lowe’s are reporting better than expected sales and have begun to see larger projects and busier contractors coming in the door.
Fred Coyne, Westbridge Homes, said, “People who have not been able to sell their homes now, feel the real estate market will not support moving up. While at the same time they begin to believe the economy is not going to get much worse so they are giving up buying that new home and taking the plunge into remodeling.”
The overall cost of home remodeling has actually gone down over the past year or two as contractors and retailers have lowered their prices to stay competitive with one another. This demand, combined with the weak economy, has actually created an incentive for banks to offer very attractive home improvement loans.
“At the same time, many people are taking advantage of first time homebuyer incentives and tax rebates. However, they are not stopping there. With the saved money, these owners are taking out a small home loan to get a kitchen or bathroom remodeled that they otherwise could not afford,” commented Coyne.
Bank rates are still the lowest in years for personal loans, mortgages and just about any sort of possible loan. Interest rates have not risen significantly yet, but as the economy picks up steam, loans will begin to get slowly more expensive.
Under Title I, the Federal Agency Housing and Urban Development (HUD) insures lenders against most losses on home improvement loans. The Title I program insures loans to finance the light or moderate rehabilitation of properties. This program may be used to insure such loans for up to 20 years on either single- or multifamily properties. The maximum loan amount is $25,000 for improving a single-family home.
This is a case of striking while the iron is still hot. Years from now people will look back at the home improvement loan rates of today and wish they had gotten a rate this low.
Refinancing your home is a good way to secure extra cash for any home repairs if your current interest rate is 2 points higher than the market and you intend to live in your house for more than 3 years. Current rates quoted by AIG and Nationwide, depending upon credit rating, range from 4.25 to 4.75 percent.
“Rising home prices may not seem like a good thing, but it actually is,” commented Coyne. As home prices slowly begin to raise again it means that the value of what homeowners are putting into homes is also rising. That means that if a homeowner spends $30,000 on a kitchen remodel this year and then decide to sell a year from now the homeowner will end up making money. Rising home values means people will begin to have more equity in their homes over time, which means the home improvement market will continue to grow as people begin borrowing against that equity again in the next few years.
Coyne’s Westbridge Homes has developed a guide on “How to Plan For a Home Remodel.” The points that the guide provides a starting point for any homeowner to begin discussions with potential remodeling companies. The guide may be found at this link.