With the economy in recovery, homeowner confidence is returning and we are seeing a marked increase in remodeling activity. But many homeowners are surprised to find that, even with excellent credit scores and solid incomes, financing options for a major remodeling project are much more limited now. Before the recession, lenders routinely approved loans based upon the projected value of what a home would be worth after remodeling. No more; that lending practice is dead and not likely to return soon. The new reality is that lenders will not loan against the future value of your home. For most of us, that leaves the Home Equity Line of Credit (HELOC) as the only viable financing vehicle for home improvement projects. So here are a few tips on how to navigate the HELOC process. 1. Shop carefully for the best lender: The amount of equity you can tap is restricted by the lending institution’s Loan to Value ratio (LTV). Most lenders today work with an 80% LTV; meaning the maximum amount of total debt you may secure with your home is limited to 80% of your home’s appraised value. But Federal Credit Unions often have more attractive terms. Recently some of our clients have secured loans with a 90% LTV by joining a Federal Credit Union. Don’t assume that you can’t join; you may be surprised to learn how easy it is to qualify for membership. 2. Put your home’s best face forward: Appraisers are human and subject to the same emotions as the rest of us; they will reward a well kept home with a higher appraised value. Prepare your home as though you were having an open house to sell it. Remember the three “P” rule: pick-up, put away, and primp. A neat home seems larger and gives the impression of being well maintained. And don’t’ forget the yard – a good cleanup and mulching will go a long way! 3. Brief the appraiser: Meet the appraiser personally and tell him how much you think your house is worth and why. You know the quirks of your home and your neighborhood better than they do. Don’t be shy, but don’t be aggressive; just let them know what your research suggests. 4. Help the appraiser: If you have plans of the house, make a copy for the appraiser. At the least, have a copy of your survey plat available. If you know when your home was built, tell them. Make a list of improvements you’ve made since you purchased the house (descriptions only – not dollars). 5. Challenge the appraisal: If you don’t agree with the appraisal, speak up. Don’t bother if it is a small amount, but if it is significant you should contact your lender and ask how to challenge the appraisal. 6. Phase your renovation: Many of our clients use a strategy I call the Equity Bump. Essentially, this means focusing first on projects that will have a disproportionate impact on the value of the home relative to the value invested. Then the home will re-appraise for more and you can borrow against that increased equity for the next project. 7. Repeat as necessary. I am not an expert in financing, but I deal with it everyday on behalf of my clients. Let me know if you would like to have a more in-depth discussion of financing options. I’m glad to help if I can.

One of the most frequent questions that I get from new clients is this: Should we buy a new house or remodel our current home?

I always point out that moving - even to a home of the same value - has its own inherent expense.  Between Realtors, appraisers, home inspectors, title attorneys, and professional movers, it is not unusual to spend an additional 10% of the purchase price just to make a lateral move. A family can easily spend $50,000 to $100,000 just to move to a different home in the same price range.    

Occasionally, this makes sense - all homes are not created equal, and some homes just can't be improved enough to justify the expense. But for most families, the equation quickly tips towards remodeling when they factor in the intangible value of a known neighborhood and good schools. Throw in redecorating expenses, years of landscaping, and a wealth of family memories wrapped up in a home and the decision is made. Take the best of what you already have and improve upon it.

 Here's an example of the strategic, but dramatic changes we made for one family recently:

           Before & After:

The room is not just brighter -- although the new architectural lighting was a critical element of our design.  Notice the new windows that emphasize the proportions of the room.  And the new French doors where the picture window was; this really brings the outdoors-in.  We made many other improvements to this space (as indeed we did to the entire home) but it looks like it was always supposed to be this way.  The family has already forgotten how dark the home used to be!  

Maybe the best possible new house is hiding inside your existing home already. 

 

Beginning a new design is thrilling for me; meeting my new clients, learning about the quirks of their particular house, realizing that I can help them.  For me, there is always a rush that is like....well, like new love.  Sure, that may be a little over the top.  But only a little.

The funny thing is that even after twenty five years, I never really know where the design will take me until I'm in the thick of it.  It's as though I sit down to sketch and the ideas just flow from the tip of the pen itself.  Its a bit of alchemy -- the ingredients are science, technology pshychology, philosphy and art, all mixing together to create architecture if the stars align just right.

That's not to say there is no method to it, for there is.  As you might expect, I begin by learning all about my clients and how they experience the house, both  inside and out.  Then my team always prepares a set of measured drawings of the house as it is.  But the magic doesn't really begin for me until I study those drawings.  Oddly, my mind seems more free to roam through the "virtual" house than it does the actual physical structure.

 And that's when it gets truly exiting for me.  Once the house is loaded into my "mind's eye" I can explore and wander in ways that I can never in the real world.  I can walk through walls.  Heck, I can pick up the walls and fling them around.  I can see the house as it is and as it might be, all at once. 

It's like having 3-D X-ray; I can visualize the entire frame of the house as though it were a skeleton beneath a skin of plaster.  I can see exactly why the house isn't working for it's owners and what strategic moves will radically improve it.  And I know then, how to surgically alter the house; where to open new views, where to bring in light, and where to add or subtract space. 

It's intoxicating and it's satisfying -- like love!