Archive for November, 2016

Finding a Lender for Your Remodeling and Home Improvement Project

Finding a Lender for Your Remodel

If you’ve been dying thinking about how wonderful it would be to have your home remodeled in the image of your dreams, then the next step will be how to get an appropriate lender for your needs. For those new to the lingo, it would be very easy to get lost amidst the sea of terms and concepts related to lending – and we haven’t even gone to which lender would be best for you. So if you are new to the lending biz, here are a few tips to help guide you on your way.

Explore your options, make sure you have a list of credible lending institutions to choose from when refinancing. It would do well if you had a list of institutions followed by the pros and cons plus the terms to each lending institution.

Many financial institutions will offer some sort of credit product especially tailored for home buyers and homeowners who seek to remodel. The best place to start looking is your local bank. Not only are they legal, they are also stable, and will prove to be the standard by which you make your financial decisions.

Your Bank: The First Stop On Your Lending Adventure

Try exploring the loan plans of the bank you deposit with. They will usually give you better interest rates than other banks. When visiting your bank for this purpose, it will do no harm to seek customer service personnel who can explain to you the various loan products and services their bank offers and the ins and outs of managing such agreements. Good banks will also offer advice on what course of action would be best for such situations, having had much experience with such.

If you have applied for other loans before, then this experience will not be any more painful than before. Many of the terms and rules applicable to them are applicable to your refinance loan.

Make sure you understand every detail of the loan. Do not gloss over some parts because you think they are not important, or that they can be omitted or referred to later. Some of the decisions you will have to make regarding your loan must be made with these terms in mind.

Your Mortgage Broker: The Loan Middleman

Mortgage brokers have the advantage of having more loan sources than other people. They will typically be more informed of the ins and outs of the lending business. However, the main issue against them is trust. You will want to associate with mortgage brokers that are trustworthy and honest. Try checking with people you know to get in touch with such brokers. Those of your friends who have had experience with these brokers can give you tips about, feedback on, and references to good mortgage brokers who do their job well.

Finding a mortgage broker is best when you are getting a second mortgage, or refinancing, or a FHA 203(k) mortgage.

Contractors: Last Line of Lending

Some contractors will also offer lending plans. However, finding a good contractor – and one that offers a good loan at that – will be doubly difficult. Their plans may also be a lot trickier to deal with. You will need to approach this option with a lot more caution than with the other options.

When considering their terms, take careful note of the monthly payment they require. If they put too much focus on the monthly payment instead of the total bill, you will have to be very suspicious of their plans.

Your Rights as a Borrower

The federal Truth in Lending Act, Article Z protects you from some of the more ostentatious scams in lending. It states that lenders must disclose their interest rates, costs, plus the total APR along with the terms of the loan for it to be legitimate. If they don’t do so, then you must scoot away from these institutions – but not after refunding your application fee (which is another one of your rights). You can use this information when comparing lenders and choosing from among them.

You should also be aware of the upfront fees which could typically cost anywhere from $50 to $300. Most reputable lenders will keep this fee low, if they charge too much or if they state that these fees are nonrefundable, you would do better with other lending institutions.

Home Improvement – Should You Be Your Own General Contractor?

For those planning a home improvement project for which keeping the budget modest is a major factor, the question often arises, “Should I be my own general contractor?” Let’s take a look at the pros and cons.

First let’s look at what a general contractor is and does.

In a nutshell, a general contractor, or GC, is the person responsible for the overall, successful completion of the project. On a small home improvement project that could mean doing the actual construction work as well as managing the details such as permits and staying on budget.

For a larger project such as a room addition, a major structural remodel or building an entire house, it falls to the GC to hire, manage and pay the sub-contractors (the workers who will be building the moulds, pouring the concrete, doing the framing, etc.) as well as making sure the job gets done on budget, on time and accurately.

If you are thinking of being the general contractor for a large project, having at least an intermediate level of knowledge of the construction process, including pulling permits, local construction codes, contracts and proper insurance is very important.

Also, you need adequate time to supervise the goings on at your site. I don’t know many people with the free time away from a job to successfully manage this type of large undertaking. If you are short on knowledge and/or time, but are still thinking of acting as GC on your major home improvement project, I wish you good luck. This is not to say you can’t do it, but the headaches might not be worth the trade off.

Let’s not forget that the main reason to act as your own GC is potential cost savings. Since professional GCs generally mark up every piece of material and every sub-contractor salary, sometimes by as much as 30% or more, if you can save some of that money by acting as your own GC, by all means do it.

But if you are not familiar with the details of completing your project, those potential cost savings can turn into cost overruns in a hurry. With a smaller home improvement project, however, the stakes are not as high and so the potential benefit is there without the same degree of risk.

But even with a smaller home improvement project, there are qualities a GC should have that are important.

Unless you’ll be doing all of the demolition, sawing, nailing and finishing yourself, as GC, you’ll be hiring, managing and paying the sub-contractors. People skills, knowledge of finances and a healthy dose of common, good sense are necessary.

If you’ve never done a home improvement project similar to the one you will be taking on, a willingness to ask questions – even ones you think are just plain dumb – is vital. Also, having a “can do” problem-solving attitude is recommended. After all, you’ll be the one everyone looks to when a fix, change or solution is needed.

The main argument against being GC on your own job is a big one. If you don’t like the finished job, you have no one to point the finger at (or fix what you are unsatisfied with) but yourself.

The value of a good GC is his or her experience and ability to solve problems. While there will certainly be extra cost involved in your job by hiring a general contractor, in the end the peace of mind might be worth the expense.