What to Do While You're Waiting for Equity

By Jonathan Haeber
CMR Columnist

Between the bad real estate market, rising mortgage rates, and lackluster economy -- your home won't be making massive gains in equity anytime soon. But you're bored, you have a lot of free time on your hands, and you want to ensure the best possible return on investment for your home. Now's the time to start thinking of remodels and renovations. Home equity mortgage rates are still low, so funding your project should be no problem.

Where do you begin? First you decide on the project. Projects with the highest return include vinyl siding, kitchen and bathroom remodels, and room additions. Next you should begin searching for a contractor and home improvement loan. Take time choosing the right contractor; you want to ensure that your home equity loan goes to good use and that you're not being overcharged.

Contracts and Concerns

Most important: you, as a home owner, should spell out all details in a written contract with your contractor. Nothing should be taken for granted, says Keith Steier, President of Brooklyn-based Knockout Renovations. Steier says even details for minor work should be covered. The contract should discuss payment terms, insurance and liability, ownership of plans or architectural drawings, and potential issues with payment to sub-contractors.

If You're Brave Enough to Do It Yourself...

If you have the know-how and gumption to undertake the work yourself, then be sure to check with your home owners association first. Especially for condominiums, you'll need permits and approval from your HOA prior to any work.

Above all, have fun changing the look of your home, and don't worry about the costs. As long as your home equity loan is being put to constructive -- no pun intended -- uses, then your investment will pay in dividends when your home equity really does start rising!

About the Author
Jonathan Haeber is a marketing writer for Discovery Channel Stores. He recently purchased his first home and took a self-taught crash course in home mortgages.

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