work on an older home?

Question

We bought a turn of the century three bedroom two bath dutch colonial in April. We are having a baby and plan to stay here at least through the next one or two, and hope to improve the value of our home by upgrading while keeping to the style of the original house. We have currently added new flooring, paint, and carpeting and are looking to eventually remodel both bathrooms, complete the unfinished basement, upgrade the electric (the bedrooms, living, and dining room have "knob and tube" wiring), and complete the stonework porch that was left unfinished in our backyard. What is the best way to finance these projects over time? Would it be better to save up gradually or get a home equite loan to finance the projects?

Answer 1

DEAL WITH THE KNOB AND TUBE RIGHT AWAY!!!!

There, now that that's said with maximum emphasis.. I would really make that a priority, upgrade your electrical - it probably represents the greatest risk potential to your family.

As far as overall and cosmetic changes - remember that your house is over 100 years old - you don't need to do everything in the first year! You might be surprised what you discover about your home after living in it for a year, changing seasons, etc. With our 100+ yo Victorian - I shudder to think of some of the well intentioned but boneheaded things we were planning to do before we took occupancy.. for instance, out pantry turned out to have some of the best light in the house - so its soon to become our breakfast nook!

If cash is tight, save some money for a while and work on the "sweat equity" type projects that you can do yourself, cosmetic stuff, stone porch, landscaping, paint.. then when you have a good clear vision of what you want to do - you can apply for a Home Equity Line of Credit to supplement what you've saved.. your cosmetic sweat equity work should have increased your appraisal vallue - which in turn will give you more equity - which in turn should make you a more attractive customer and provide you a better interest rate!

Word to the wise though - living through renovations, esp. removing plaster putting up drywall is messy and stressful - certainly not something I would reccomend doing while juggling newborns.

Answer 2

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Answer 3

Personally, unless you plan on keeping the home long term, it would be best to save gradually and pay cash for as many improvements as possible. If you take out a home equity loan, you are only limiting what you will make from the sale if you have to sell before the home equity loan is paid off. Definitely look to improve the electrical system for safety and investment purposes (thanks for mentioning it). Don't forget, ground faults in the kitchen, bathrooms, and outdoor receptacles. If you are not comfortable, get an electrician to do the work. Take care of the basics first as well; things like smoke detectors (interconnected, not those cheapo battery units), and anything maintenance related. Check under the house for termite damage and leaks. Cosmetic improvements are worthless if the house is not sound.
Good luck with your project!

Answer 4

Unless you know a contractor or handyman that is willing to work on little bits at a time over the years you may want to get a loan. otherwise you will constantly be looking for someone to do your work. Also try to estimate the value these projects will add to the home because It may be something where your could wait until your within 6months to sell then take out a loan have the crews come in ,fix it and then sell the house(hopefully it sells quick) and use the money from the sale to pay off the loan for the work. This will save you money in paying the overall intrest of the loan.

Answer 5

I personally would try to save up as much as I can and look to Estate sales,garage sales,etc for things that are of the style of your home. As to the electrical I would get that done FIRST,a safety issue,and if you had to take out a loan for that,then so be it. Also using the income tax return is a great way of getting a few things checked off the list without having to take away from other things to pay for items. Also,sometimes you can get a Electrician who is having a "slow time" due to the "off season" and maybe he would cut you a better deal. Also there are home improvement sales going on everywhere right now due to tax time,so you might luck out on that too. The garage sale,estate sale ideas are for fixtures that might be in good shape but just need to be refinished and you can get that done usually fairly inexpensively. I would pick a few things,put them on a long term goal list and slowly work at getting each of them done AFTER tax time each year if it were me,that way,you are reinvesting the money into your home and NOT just blowing it somewhere else. I also would cut back in things I didn't need to be able to save more money too,like not eating out so often,lavish vacations,etc to cut corners to have more to spend on the house. Just some ideas we are working on ourselves and seem to be working towards our long term goals. Good luck and happy remodeling. Also congrats on the new baby what a Blessing that is.

Answer 6

Most importantly, your estimates for repairs will generally be too low, especially with an older property, and it is just too tempting to keep dipping into that equity and you will not be building equity. Focus on one job at a time, and understand when you are in over your head, do research and get consultations Before you start.

Answer 7

My own philosophy is if you can pay out of pocket as opposed to dipping in possible equity, I would pay as I go. Do whatever work you can by yourselves. We have re-carpeted and put in ceramic tile in the kitchen and bath by ourselves and I must say we did a great job for first timers!

Answer 8

Confratulations. It sounds like a wonderful house and you sound like good homeowners. Which ever way you go, I predict it will work out well in the end.

Answer 9

The best thing you can do is get a home owner warrenty. You'll be glad you did!

Answer 10

old homes