Bank Adviser Monthly Articles
November 2016
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The Features that Boost Home Sales & Values
A few ways to afford upgrades to boost your home value and final sale

Many homeowners consider renovations and upgrades to their home when looking to sell. There are several key upgrades to consider that will boost your home�s value, as well as several ways to finance these large purchases.

Three top features to boost value

Home renovation projects can be as simple as adding a new coat of paint on the walls to making complex additions. The most important factor to remember for selling a house is to appeal to the buyer, not to your own tastes.

According to an August 2016 article in Kiplinger by contributor Andrea Browne Taylor, some of the top projects to consider are creating a laundry room space, adding exterior lighting to the facade of the house and upgrading the kitchen.

�A separate laundry room topped the National Association of Home Builders' (NAHB) list of most-wanted home features for buyers of all ages�from millennials to seniors,� reports Taylor, who also says that doing so could be as easy as adding a little space and separator to a basement and cost as little as $1,000.

According to Taylor, 90 percent of homebuyers want exterior lighting, and at $63 to $135 per fixture, it�s relatively cheap to install. Lighting up your home could help it get the attention of your potential buyers and even help sell the home before they even walk in the door.

�Exterior lighting is the most-wanted outdoor feature, according to the NAHB. Options include spotlights, walkway lights and pendant lights,� Taylor reports.

Finally, kitchen upgrades are still at the top of the wanted features by prospective homebuyers.

�Eat-in kitchens are a must-have for many buyers, especially families with children. It's a space where they often congregate in the morning for breakfast before the kids head off to school and parents to work, or in the evening for dinner so everyone can share highlights from their day,� Taylor says.

Assess your kitchen to see if you can open up space by removing a wall. However, Taylor advises to  make sure it�s not load bearing, or else you could damage other parts of the home.

Financing options for your construction project

Whether you�re considering one of the aforementioned top three upgrades, or an array of smaller projects to freshen up the house and boost its value, you�ll need to plan how to finance them in advance.

�To pay for large remodeling projects�homeowners often take out a construction or renovation loan, which entails refinancing with a mortgage that reflects the house�s estimated value post-remodel. Many lenders provide mortgages that cover up to 80 or 85 percent of the remodeled home�s value,� says Washington Post contributor Wendy Jordan in an August 2015 article.

The benefit of taking out a construction or renovation loan is that because mortgage rates have been favorably low, you could potentially end up with a similar or even lower interest rate than you were currently paying.

If you can�t refinance your mortgage, Jordan suggests you consider using the home as collateral and take a home equity loan or home equity line of credit (HELOC).

�A home equity loan, or second mortgage, may be an option if the home is worth more than the amount the owners owe through their first mortgage,� says Jordan. The borrowed amount is provided as a lump sum, with closing costs, and the homeowners must begin paying off the loan immediately. The interest rate is fixed and the payments are made monthly to repay the loan within a certain period of time.

For homeowners who need more flexibility, Jordan advises a HELOC over a home equity loan.

�Once the line of credit is established, the homeowners can borrow at any time during the draw period specified in the HELOC agreement, and can borrow any amount up to the maximum credit limit specified,� reports Jordan. With HELOCs, the closing costs are by assessment and the payment period is stretched out. However, interest rates are variable so monthly payments may vary.

Another option for homeowners is to take a personal loan to finance an upgrade. However, the applicant(s) must meet credit requirements and be qualified to borrow�and because the loans are unsecured, interest rates will be much higher and repayment terms will be held strictly at 12 and 60 months.

Whatever choice you make in the end, consider all your options first.

�Lending caps vary, and a range of borrowing terms may be available from different lenders, so it pays to shop around,� Jordan says.


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