Remodeling Projects: Choosing a Contractor and Financing
If the project is done correctly, remodeling can add value to your home. However, that is easier said than done.
Summer is generally the time of year when activity in the housing market picks up. Buying and selling often gets the most attention, but many homeowners will complete remodels during this period as well. If the project is done correctly, remodeling can add value to your home. However, that is easier said than done. One of the most important aspects of completing a home remodel is finding the contractor who is right for the job.
“Research is very important, looking at the builders’ history, online presence, projects they did in the past and what their reviews are like on sites like Yelp and others,” said Cory Monroe, president of NewWave Construction and member of the Southern California Remodelers Council.
Recommendations from friends who have completed a remodel in the past couple of months can also be helpful, Monroe added.
Inspectors will periodically check up on the project to ensure it is being done properly. These professionals are a valuable resource during remodels, as Monroe recommended you should pull them aside and ask how they see the quality of work based on past experiences with other contractors. This could end up costing you money, but it is best to spend more to have a job done correctly.
Financing is Another Important Aspect of Remodels
Choosing the right contractor is just one step in the process of completing a remodel, as you also need to know how to finance such a project.
Financing for remodels isn’t the same as obtaining a mortgage to purchase a home. According to Zions Bank Residential Lending Manager Jeremy Lowry, a Construction Conversion Loan may be a good option for a major remodeling project. If you have equity in your home, a Home Equity Loan might be an option for you. Additionally, a Construction Loan can be a good option; This type of loan combines the lot purchase, construction and permanent financing into a single loan with one set of closing costs.
“Every homeowner’s goals are different depending on their financial or life situation,” Lowry said. “For example, some plan on paying off their mortgage by retirement, others might only to live in the home for a short period of time. Regardless, the most popular loans are amortized over a longer term with no pre-payment penalties so that the borrower has options.”
Prior to applying for a loan for your remodeling project, it is recommended that you consult with a home financing loan officer to determine how you are going to finance the project and if you qualify for the right amount of money necessary to complete it.
After this consultation, you’ll want to begin the application process. Lowry said the best way to secure a lower rate on your loan is to show a lender you’re “financially fit.” Lowry states there are four major areas considered during approval that will impact your interest rate and monthly payment:
- Debt-to-income ratio
- Size of a down payment
- Credit history
- Ability to repay the loan
Understanding the ins and outs of hiring a contractor and securing financing is essential for a new bathroom or home addition to be a success. Consider conducting research and receiving recommendations to select the right contractor and the right financing for your situation.
Get more information on financing your remodel.