Wisconsin Homeownership Preservation Education Maintaining Your Home Section Overview

Wisconsin Homeownership Preservation Education Maintaining Your Home Section Overview

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Wisconsin Homeownership Preservation Education Maintaining Your Home
Section Overview
Overview and Goals
Being a Homeowner
Your home systems
Keeping up with repairs
Preserving Your Home
Maintenance checklist
Risks to Your Home
Natural disasters and catastrophes
Homeowners’ insurance
Security risks
Liability risks
Energy Efficiency
Doors, windows, other openings and cracks
Mechanicals and appliances
Sustainable practices
Home Improvements
Move or improve?
First steps
Choosing professionals to help
How to choose good professional help
How much value will it add?
Do It Yourself
Should you do it yourself?
Is it worth the cost savings?
Financing Home Improvements
Cost over-runs
Home improvement loans
Home Equity Lines of Credit (HELOC)
Cash-out refinance
Self financing
Pull cash out of investments
Family loan
Alternative options
Paying Off Your Mortgage
Accelerated payments
Lump sum pay-off
Supplemental Materials
Additional Resources
Maintaining Your Home
So you’ve purchased a home, unpacked the boxes, and made it your own.
Now what?
Your house has an entire network of interworking systems of which you
are now in charge to keep running smoothly.
Now that you are your own landlord, there is no one else to call when
the basement floods, furnace quits, or garbage disposal stops working.
But with some regular maintenance, you can greatly reduce the chance
of emergency calls to the contractors. Also, with maintenance you’ll
stretch the life of your systems and mechanicals, meaning you’ll
increase the value of your home AND have more money available for the
kinds of things you’d rather spend your money on.
This section will walk you through a basic home maintenance plan.
Depending on the age and condition of your home, your schedule and
duties may vary slightly, of course. But no matter what home you live
in, the fact remains true that home maintenance is one of the biggest
ways to keep and improve the value in your investment. It will also
discuss home improvements and options for financing them.
Important words and concepts that are introduced will be written in
bold and italics. Definitions of these key words will be listed at the
end of the section.
The end of the chapter contains supplementary materials: definitions,
handouts, worksheets, and activities that can be individually
photocopied or printed to distribute separately from the rest of the
WHPE curriculum.
Overview and Goals
While many of us would prefer to spend our time and money elsewhere,
keeping up on general maintenance of the home is one of the most
fundamental ways to keep us from being forced to spend MUCH more time
and money when something goes wrong.
Performing home maintenance has other valuable results. As you track
and monitor the systems in your home, you will gain an understanding
of its inter-workings and gain useful skills. Also, you will feel a
sense of pride in knowing that your efforts both keep your family safe
and build value in your investment.
The goals of this chapter are:
1.
To help you understand the responsibilities of owning a home.
2.
To provide you with the tools to help budget for repairs.
3.
To provide information and advice on home repairs
4.
To understand the costs and benefits of financing repairs and
remodels.
Take-away messages:
1.
A lot goes into owning a home beyond simply choosing what color to
paint the walls.
2.
Staying on top of home maintenance is important to save money in
the long run.
3.
Energy efficiency and proper insurance can also save you money
over time.
Being a Homeowner
Your home systems
On a typical day, you may not look at our homes any further than the
casually at the rooms we live in. However, behind the walls, in our
basements and crawlspaces, and encasing our house are the systems that
keep our home a nice place to live. As a homeowner, you must have a
basic understanding of these systems and what they need from us in
order to remain safe and functional.
Electrical
Your home’s electrical system starts with the cables running into your
house and ends in places such as your ceiling fans and toaster. Once
electricity enters your home, it is first channeled through the fuse
box or breaker box. Then it is sent out via wires - in older homes
sometimes wrapped in cloth (“knob and tube”) or in newer homes encased
in a plastic sheathing (“Romex”) - which runs between the spaces in
your walls and floors. Finally, it emerges in electrical outlets and
light and ceiling fixtures. Electricity is something only to be worked
on by a professional electrician, but keeping an eye on your
electrical system and recognizing signs of trouble are important ways
to reduce the risk of fire and danger to your family.
Plumbing
Your plumbing system starts in the water main or private well which
then enters your house and probably has a “main shut off valve” in
case of major emergencies. From there, it may first run through
mechanicals like a pressure tank, water heater, and water softener
before climbing through the walls and floors via pipes (typically made
of lead, copper, or PVC). The pipes emerge in such fixtures as our
faucets, shower heads, toilets, washing machines, and hose spigots.
Like electrical, most plumbing jobs are best left to the trained
professionals. However, due to the serious and swift damage that can
be caused by water in the home, homeowners should be diligent in
completing seasonal maintenance and should always keep an eye out for
small leaks that can quickly become big problems.
Heating, ventilation, and air conditioning (HVAC)
As a Wisconsin homeowner, you might be able to do without air
conditioning, but everybody depends on heating systems to work hard
all winter. Your home is likely heated by hot water (boiler heat), hot
air (forced air heat), electric coils (electric radiator heat), or
wood. Some homes may employ a radiant heating system using coils
running beneath the surface of your floor. No matter what system you
use, keeping it running through winter is absolutely critical to the
health of our families and even our home itself. A home that is not
heated in winter will suffer frozen and burst water pipes, which can
rapidly deteriorate the value and livability of the property. To keep
our heating systems and cooling systems functioning properly, there
are many things homeowners can do both on their own and with the help
of an HVAC professional.
Roof, gutters, siding, and exterior
While stuck inside all winter, we can almost forget they exist, but
taking care of your home’s exterior systems is absolutely critical
through every season. The roof keeps rain out, but can be damaged and
compromised by ice damming, hail, and other hazards. Heavy snow left
sitting on flat roofs can cause structural damage. The role of gutters
is all too often overlooked by new homeowners, but the role they play
in keeping your home dry is vital. While siding requires less frequent
maintenance than the roof and gutters, it is still an essential layer
of defense against the elements and should be seasonally examined for
damage, wear and tear.
Basement, foundation, and drainage systems
In case you haven’t heard it already: Water is a home’s worst enemy.
Keeping water directed away from the house is the key way to avoid
foundation problems and water intrusion. A significant part of this
system is the roof and gutters, as described above. But an equally
important part is the landscaping around the house and the slope of
the yard. Soil should be built up around your home to create a barrier
which directs water away. If your lot is sloped and directing water
toward your home, there are options like rain gardens, drain tile, and
swails to collect or divert the water and stop it from flowing into
your basement. Annual lawn maintenance is often required to keep
sloping in place.
Attic and insulation
The attic can be a seldom visited space, but its condition, level of
insulation, and amount of ventilation can make a dramatic difference
in heating and cooling costs. A well maintained attic will also help
avoid costly damage caused by “ice damming”—a widespread problem in
Wisconsin. Ice damming occurs when an attic is without proper
insulation and ventilation. The snow on the roof melts and then
refreezes as shifting, thrusting sheets of ice, causing shingle damage
and leaks inside the home. Relatively easy fixes include properly
ventilating your attic, using a snow rake to remove excess snow from
the edge of your roof, and sometimes even using low-voltage electric
coils placed on the roof which melt and shed snow before it has a
chance to freeze into an ice dam (this is especially helpful in
tough-to-reach places like the valleys where roof peaks meet).
Doors and windows
Doors and windows are terrific because they let the fresh air and
sunshine into our homes. On the other hand, they have the opportunity
to let the cold air in and the warm air out during the winters. They
also serve as either a barrier or a welcome mat for pests. Windows and
doors bear the effects of weather and can become loose, sticky, or
begin to rot. With some simple maintenance tips, you can reduce the
heating bills, and keep your doors and windows in solid repair.
Home protection systems
Your home protection system might be made up of smoke alarms, fire
extinguishers, carbon monoxide monitors, and fire ladders. Annual
checks and occasional replacement of some of these items will make
your family more secure. Additional safety features like secure hand
rails and well-shoveled walks in the winter are important too.
Fireplace and chimney
Creosote is the by-product of burning fires, the sticky black soot
which builds up inside chimneys over time. If your home has a
fireplace or woodstove, an annual cleaning is very important in order
to keep creosote from building up and causing a fire inside the
chimney which can then quickly spread to attic, roof, and house. Even
if you do not have a fireplace in your home or do not use it, it is
likely that your chimney is being used to vent the furnace and/or
water heater up from the basement. While a fire hazard from these uses
is minimal, there are still a few things you need to keep an eye on in
order to ensure the longevity of your chimney.
Preserving Your Home
D
Keeping Up with Repairs
Failure to maintain your house may result in….
*
Damage to Home
*
Loss in Value
*
Large Repair Bills
epending on the age and condition of your home, its needs may vary
slightly. For an even more specific maintenance list, refer to a
professional home inspector who can walk you through the home and
describe your systems and their condition in great detail. The
following checklist contains some of the most common and universal
items a homeowner should maintain and monitor, along with a suggested
schedule:
Maintenance Checklist
Spring
Fall
Annual
Roof, Gutters, Siding, and Exterior
Clean gutters, strainers, and downspouts


Trim trees so that they are at least 2 feet away from roof & gutters.

Check for damaged or loose shingles and blisters


Check for damaged flashings around chimney and other vents


Check for damaged gutters and downspouts


Check fascias and soffits for failure and decay


Check antenna guy wires and supports


Evaluate roof for future replacement (replace every 15-40 yrs)

Basement, Foundation, and Drainage Systems
Check basement for moisture following wet weather

Check soil grading to ensure it slopes away from the house

Check foundation walls, floors, and masonry for cracking, heaving, or
deterioration.

Doors and Windows
Check for broken glass and damaged or missing screens

Check all window and door hardware for proper function, lubricate
where needed

Check for loose or missing seals (are windows loose within their
frames?)

Check caulking at doors, windows, and all other openings and joints
between wood and masonry

Check weather-stripping for tightness of fit

Heating, Venting, and Air Conditioning (HVAC)
Clean or change air filters EVERY THREE MONTHS


Have systems checked by qualified HVAC person

Remove window air conditioners for winter or put weatherproof covers
on them.

Clean dirt and dust from around furnaces, condensing units, grills,
and registers

Service humidifier and dehumidifier

Maintenance Checklist, con’t.
Spring
Fall
Annual
Electrical System
If fuses blow or breakers trip often, call an electrician to locate
the cause and make repairs.

Check condition of cords to all appliances and plugs for damage and
wear. Replace as necessary.

Test ground fault circuit interrupters to ensure proper function.


Periodically check exposed wiring and cable. Replace at first sign of
wear and damage.

Plumbing System
Before winter, close exterior spigots from their interior shut-off
valves and drain thoroughly to avoid freezing. Frost-free spigots are
also available at your hardware store and are a great protection.

Check caulking around shower, bathtub, and sinks.

Check faucets, hose bibs, flush valves, and underneath sinks for leaks
and corrosion.

Check water heater for corrosion or leakage.

If you have a private septic tank, clean the filter every 6 months and
have it pumped every three years.



If you have a private well, have it checked for safety, including
bacteria, nitrates, and other compounds.

Attic and Insulation
Peek in your attic with a flashlight and examine the underside of your
roof’s sheathing for signs of moisture or leaks.


If insulation is old or has been flattened down, consider adding more
in order to maintain winter heating costs.

Home Protection Systems
Test Smoke and Carbon Monoxide Detectors.

Check indicator on pressure gauge of fire extinguisher.

Know the location of all gas shut-off valves.

Fireplace and Chimney
If you use your fireplace, check and sweep chimney annually.

Visually inspect chimney, roof up, in the attic, and in the basement,
to check for missing mortar and/or loose bricks.

Visually inspect chimney cap for damage or absence.

Risks to Your Home
In addition to the seasonal elements and the damages caused by normal
wear and tear, there are two other risks to your home of which you
should be aware and from which you can work to protect yourself. Those
are Natural Disasters and Catastrophes, Security Risks, and Liability
Risks.
Natural Disasters and catastrophes
While we can weatherize our homes and protect our families with smoke
detectors and fire extinguishers, sometimes we simply cannot avoid the
risk of a rare disaster. In the case of natural disasters and
catastrophes, we likely have no other way to pay for the losses
besides with the help of an adequate homeowner’s insurance plan.
Homeowners’ insurance
Most lenders will not allow you to purchase a home without this
insurance, so you probably have it. However, not all insurance
policies are created equal, so here is a list of items to discuss with
your insurance agent to make sure you are properly protected should
disaster strike:
1.
What is the value for which my home is insured? (Should be at
least 80% of current rebuilding cost)
2.
What perils is my home protected from? (Fire, hail, tornado, ice
damage, others?)
3.
Do I need to purchase federal flood insurance? (If you live in a
flood zone, this is recommended)
4.
Is my policy being paid through my lender via a monthly escrow
account? Or do I need to pay an annual premium?
Security risks
Most thefts and burglaries are crimes of opportunity. That is,
perpetrators enter through unlocked doors, windows, and garages to
steal items from your home. Keep your doors and windows locked when
you are not at home and at night. While this will deter most thefts,
there are other added precautions you can take to keep your home, your
family, and your belongings safe.
*
Lock doors and windows when you are gone and at night.
*
Install motion-detector lights at key points of entry.
*
Install timers on your indoor and outdoor lights if you are gone
for extended periods of time.
*
Consider a home security system.
*
Place stickers on your doors and windows advertising that your
home is protected ( You can do this even if you do not have a
security system or a dog!).
*
Keep trees and bushes trimmed away from the house to eliminate
hidden places for a burglar to work.
*
Participate in or start a Neighborhood Watch in your community.
*
Purchase a safe to hold your special items and insurance policies.
Purchase adequate insurance for the value of your home’s contents
While it is important to proactively work to prevent theft,
unfortunately, sometimes even the best prepared homeowner can find
themselves victim of a break-in. In addition, there is a risk of
property damage due to storms or fire.
Make sure your belongings are protected with a reliable and
comprehensive insurance policy. Insure items for their replacement
value, not their current value (which is likely less). Make sure your
insurance company knows what kinds of items you have in the home, from
computers and electronics, to art, instruments, and jewelry. Take an
inventory of the items and keep that list in a protected place. Take
pictures of items, especially if they are unique. If you own a
distinctly valuable item like a special piece of jewelry or art, have
it appraised so that if it is stolen your insurance company will have
a realistic idea of how to reimburse you.
Liability risks
As a homeowner, you are liable to keep your property in a safe
condition. Not only could the mailman trip on their way to your door,
your dear grandmother or child’s friend could also take a spill. While
we’d hope that our grandmother wouldn’t sue us, sometimes those
lawsuits come from the insurance companies of those who are injured on
our properties. They don’t want to pay the claim, and they will make a
claim against your insurance to pay for grandma’s hospital stay. There
are many things a homeowner can do to minimize risk of being held
liable for injury on their property.
*
Shovel regularly and clear away ice in the winter.
*
Melting snow should be diverted away from our sidewalks and
entryways via gutters and correctly sloped landscaping.
Maintaining drainage systems in the summer will provide beneficial
effects in winter.
*
Trim trees away from sidewalks and driveways.
*
Patch holes and cracks in your walkways to avoid trip hazards.
*
Swimming pools and trampolines should be kept enclosed within
secure fencing to avoid temptation from neighborhood children to
use without permission.
*
Keep yard and home free of clutter and debris that may be pose
health or trip hazards.
*
Do not store toxic chemicals.
*
Lock up knives, guns, and other dangerous items.
Purchase adequate liability insurance
Just as security risks are sometimes unavoidable, so are liability
risks. That is why it is critical to have liability protection on your
property. Most insurance companies will apply liability insurance to
both injury that occurs accidentally at your home, and injury that is
caused by you but happens away from the home. The minimum recommended
coverage is $100,000 per person. Speak with your insurance
representative about the plans they offer and what is the best
coverage to protect you.
Energy Efficiency
E
A Home Energy Audit
An energy audit is a terrific way to find out where your house is
losing heat.
To conduct an audit, a professional will come to your house and
examine it, commonly employing a blower-door test where they close
your home and attach a blower to your front door which creates a
negative suction on your house.
Under these conditions, the technician will be able to go around your
house, perhaps employing a small smoke stick, to see where air is
seeping through the cracks.
There are many other innovative techniques to determine exactly where
you can focus your attention in order to get the most bang for your
buck.
Weatherization and home energy audit resources
For more ideas and for information on tax breaks, special financing
and other incentives, call Wisconsin’s Focus on Energy at 1-800-762-7077,
or see www.focusonenergy.com.
You may also want to contact the Wisconsin Division of Energy Services.
They provide services to Wisconsin qualified residential households
with energy assistance and weatherization needs. For more information
call 1- 866-HEATWIS (432-8947) or visit
http://www.homeenergyplus.wi.gov.
nergy efficiency is all the rage, and for good reason. The cost
savings will really add up, and the small contribution you make to the
environment will too as more and more of your friends and neighbors do
the same.
Doors, Windows, Other Cracks, and your Attic
A key to energy efficiency is to have a well-sealed and well-insulated
home. Nobody wants to spend hard-earned money on heat just to let it
escape through the cracks, walls, and ceilings.
Weather-stripping—the brass, plastic, vinyl, or foam that fills the
gaps where frames meet windows and doors—is applied as a standard in
newer homes and building materials, but that weather-stripping will
wear down in time and need to be replaced. In older homes, weather
stripping may be non-existent until you apply it yourself. Some
temporary fixes to drafty doors and windows include seasonal rope
caulk or heat-shrink plastic applied to windows. A negative aspect of
these choices is that once applied, you will not be able to open
windows until you remove the application for the season. For a
removable efficiency device, consider draft-stoppers, fabric tubes
usually filled with dried beans or uncooked rice, which lay across the
cracks where window meets frame or door meets threshold.
While windows and doors are big sources of energy loss, there are lots
of others that aren’t quite as obvious, but can cause even more
significant heat loss. The “sill plate” runs the perimeter of your
home where the concrete basement foundation meets the stud walls that
support the rest of your home. This is the #1 spot for heat loss in an
older home, and is easy to seal with spray foam insulation.
Heat rises. So your attic provides the last line of defense in keeping
heat inside your house. A good attic system will have adequate levels
of insulation and proper ventilation. Insulation levels are measured
as an “R-Value” which reflects an ideal thickness of padding. R-49 is
recommended in Wisconsin, and you can calculate how much you need
depending on which type of product you choose (batting, loose fit, or
rigid foam). Ventilation ensures that the certain amount of warm,
moist air that does enter your attic is properly released before
condensing and causing mold or mildew. Alternatively, ventilation in
the summer keeps your attic from overheating and forcing some of that
heat into your living space.
Remember to look for energy efficiency ratings on the following
mechanicals and appliances:
*
Clothes Washers & Dryers
*
Refrigerators
*
Dishwashers
*
Microwaves
*
Light fixtures, ceiling fans, LIGHT BULBS
*
TV’s, DVD players, Computers
*
Room Air Conditioners
*
Furnaces and Central Air Conditioners
*
Water Heaters
*
Water Softeners
*
Dehumidifiers
*
And many other products for your home!
Mechanicals and Appliances
Energy Efficient appliances and mechanicals are designated with the
“ENERGY STAR” label. To receive the ENERGY STAR, a product has to
exceed the federal government's minimum standards for energy
consumption and efficiency standards by considerable amounts. It is
important to remember when purchasing a new appliance that not only
will you pay for it that day at the store, but you will continue to
pay for it year after year in energy costs, and energy costs continue
to rise. Some ENERGY STAR products may be more expensive, but by
remembering to consider future costs, you will likely determine that
energy efficient products are a smart choice for your family.
Sustainable or “green” practices
Sustainable building and remodeling is a thoughtful way of planning
for the future of your home. Some of the ideas behind green building
include:
*
Reduced Maintenance and Replacement Costs over the Life of the
Building
*
Energy Conservation
*
Improved Occupant Health and Productivity
*
Lower Costs associate with Changing Space Configurations
*
Materials Harvested from Renewable Resources (e.g. Bamboo and
Cork)
*
Salvaged, Refurbished, or Remanufactured Materials
There is an immense movement for sustainable design. There are
sustainable heating and cooling systems, landscaping strategies,
vegetable gardening, water retention and heating capabilities, and
many other possibilities for integrating “green” ideas into your home
and lifestyle.
Before taking on the next project, check out a book from the library
or scan the internet for innovative ideas on ways you can incorporate
sustainable practices into your project.
Home Improvements
Move or improve?
At some point you may find your house no longer fulfills your family’s
needs, and you will find yourself wondering… Should we stay or should
we go?
Before placing that for sale sign in the yard, consider the relative
cost-effectiveness and ease of staying in your current home. Selling a
home is expensive; there is the realtor fee of around 6%, the title
company and closing costs, the state transfer taxes… not to mention
the closing costs and origination fees you will encounter when you
purchase a new home. And oh, the delight of moving!
Perhaps the problems are external and too difficult to work around—a
low-achieving school district or a deteriorating neighborhood. Or
perhaps something has significantly changed in your life and you are
no longer able to carry the responsibility of being a homeowner,
financially or physically. In these cases, selling the house and
moving might be your best option.
But if the problem is more like growing pains, a better choice may be
to stay put in your current home and make the improvements needed to
create a space that better fits your family’s needs. Thanks to cable
television and the big box stores, it is almost impossible to have
avoided at least one episode of some home-makeover program, or to have
not browsed through one home improvement magazine in the grocery
aisle. Ideas are everywhere, to the point that it can be overwhelming.
First Steps
A good first step is to sit down as a family and think about the
specific needs that your house is not currently meeting. Do you need:
*
Storage space for toys, coats, or other household items?
*
Food preparation space in the kitchen?
*
Study and office space?
*
Another shower and/or toilet?
*
Simply more room?
Brainstorm together and make a list of the things you wish your home
provided, and then rank those items in order of importance.
Also, put on a “fresh set of eyes” for a few days and look for
opportunities in your house. Ask yourself the following questions:
*
Are there places in your house that you seldom use or use in a way
that doesn’t maximize their potential?
*
Is there an unfinished space in the basement or attic?
*
Is there a sunroom or screened porch that could be finished and
heated?
*
Are there rooms that could benefit from storage systems to make
them more user-friendly?
*
Is the furniture in a certain room limiting the way you can use
it?
*
Is there room on your lot to do an addition?
Choosing professionals to help
If you look at your home improvements wish list and find items too big
or time-consuming to tackle on your own, you’ll need to start looking
for professional help. Here are some of the characters you may want to
bring in to discuss your family’s needs.
General contractor:
A general contractor is a professional organizer of labor. He or she
knows how to coordinate professionals like plumbers, electricians, and
drywallers, and likely has a trusted group of these “subcontractors”
s/he chooses to work with. A general contractor is basically able to
take the pressure off the homeowner to coordinate and hire labor, and
get the job done to the specifications of the homeowner at an agreed
upon price. This service comes at a cost, but often the contractor’s
fees are somewhat offset by discounts on labor and materials that they
are able to provide through their connections. They can also help plan
the project and serve as a resource for knowledge.
Carpenter:
A trained carpenter can build the foundation and rough work of an
addition, a deck, or a screened porch. They also do finish woodworking
like building cabinetry, hanging doors, and mounting trim.
HVAC professionals:
Heating, ventilation, and air conditioning professionals work on your
heating and cooling systems, including ductwork and radiators.
Electricians:
Electricians work on connecting new light switches and fixtures,
electrical outlets, and all the other wiring and electrical needs in
your home.
Plumbers:
Plumbers help not only with reconfiguring and creating bathrooms, but
also in creating hook-ups for new clothes washers. In the kitchen they
can move or replace sinks, garbage disposals, and dishwashers.
Drywallers, mudders & tapers, and painters:
They will put up drywall over stud walls or repair/refresh the current
walls in your home.
Flooring professionals:
From carpets to tiles to hardwood floors, you or your contractor may
bring in a professional to install, repair, or replace flooring in
your home.
Handyman or handywoman:
Perhaps you’ve got some jobs around the house that are beyond your
comfort level, but not too large. A handyperson is a terrific and
cost-effective choice for many repairs. While each differs in their
skill and offerings, many handypersons are known for doing small
plumbing, door and window, painting, woodworking, patching, venting,
and other carpentry repairs. A good handyperson will be insured, and
tell you what they are experienced doing, referring you elsewhere if
the job is beyond their scope.
How to choose good professional help
First, determine the scope of the work you’d like to accomplish. Do
you need just one professional to complete one type of job (e.g. a
plumber)? Or will the job require many professionals working together
to create the desired end product, in which case you may want to
choose a general contractor to help you coordinate? Or perhaps the
jobs are small enough that an insured handyperson could complete them
without the cost of more specialized professionals?
If you’ve decided to be your own general contractor, it is your
responsibility to thoroughly consider each professional you hire. If
you hire a general contractor, they will have done the vetting
(“background checking”) so you just need to investigate the general
contractor.
O
Angie’s List
Angie’s List is an online database of service provider reviews. You
can search your community and determine if the person you are planning
to hire is trustworthy and has done good work elsewhere.
www.angieslist.com
nce you determine who you’ll need to help you, the process of choosing
the right professional is basically the same.
1.
Ask Family, friends, colleagues, or other trusted community
members who they recommend based on positive professional
experiences (beware the “brother-in-law” referral).
2.
Contact the Chamber of Commerce, state or local professional
organizations, or labor unions for referrals.
3.
Your realtor or home inspector may be another resource for
referrals.
4.
Least recommended, search the phone book or internet
5.
**Also search for consumer feedback or testimonials that may be
posted on the internet.
6.
Compile a list of at least three professionals from each area you
intend to hire (or just three contractors if you plan to hire a
contractor to coordinate the work).
7.
Ask if the professional is licensed and insured. Call or check the
website for the state licensing authority if you want to make sure
they are properly credentialed. http://drl.wi.gov
8.
Check the circuit court system for past or pending lawsuits filed
against the individual or company. http://wcca.wicourts.gov
9.
If they were not referred by a past client, ask the professional
for references and follow up.
10.
Finally, schedule a meeting with the professional so you can meet
them in person and they can see first-hand what you want
accomplished.
11.
Ask what they think is a reasonable timeline to complete the work.
Is it acceptable to you?
12.
Ask for a detailed, itemized, written estimate of costs. Get
estimates from at least three professionals and compare them
before choosing one.
Contract
Once you’ve chosen the professional(s) you’d like to work with, you
will likely be asked to sign a contract. Make sure that the contents
of the contract are acceptable to you before signing. Also, ask the
contractor to estimate a completion date for the contract so you can
hold them accountable if the work is not finished in a reasonable time
frame.
Insurance
If you haven’t verified it already, verify proof of insurance before
hiring any professional to work on your home. The likelihood of injury
is high while working physical jobs, and if they are not insured—your
insurance will be held liable - meaning your premiums will go up, up,
up.
Deposit
Most contractors and professionals will ask for a deposit before
beginning work, often times 10-50% of the estimate. This is customary,
however you should not have to pay the entire cost before the job is
completed. If someone insists you pay the full cost before they begin
or finish the work, take a step back. Either verify that this is
customary practice for this particular type of job, or else strongly
reconsider that professional.
Permits
Be sure to always get the proper permits from the city, township, or
county zoning before doing work. Licensed professionals you hire may
obtain these on your behalf, but do not assume that they will without
checking. The permit process is typically painless, relatively
inexpensive, and there to ensure that the work is done properly. The
municipality will come out one time while the work is in “rough”
condition, like before you’ve closed back up the walls. If something
is not safe, the inspector will flag the error and make sure it is
fixed before completion. Then they’ll come again to see the finished
product. Homeowners are allowed to complete their own plumbing and
electrical (special rules apply in condos or owned rental property).
The inspector provides a particularly helpful service if you are
completing the work yourself and want to get an expert’s opinion
before closing up the wall.
Consequences of completing work without a permit may not be immediate,
but they can be serious when they arrive. If any future damage occurs,
your insurance may not cover the repairs of something which never had
permits. Also, you may be forced to show permits some day when you
attempt to sell your home. If you cannot produce evidence that the
work was completed with the proper permits, it will decrease the
value. Should you sell the home without disclosing that fact (which is
illegal in the State of Wisconsin), if harm or damage occurs later the
new owners may come back to hold you accountable.
Construction Liens
Just like any bill, it is important to pay your contractor and
construction bills on time. But unlike most other billing agencies,
contractors and other home improvement professionals have the ability
to put a “construction lien” on your property if you do not pay. A
lien is a legal document filed with your local register of deeds,
basically making your debt public record. A lien filed against your
property will be held against you if you try to take out a home equity
loan, line of credit, or refinance. And before you collect proceeds
from the sale of your home some day, the company will have legal
rights to that portion of the profits. A “lien waiver” is a document
from a contractor, subcontractor, materials man, or other party
stating they have received payment and waive any future lien rights to
the property. Be sure to ask for a lien waiver once you’ve paid and
keep it in a file.
Disputes
Should any dispute arise between you and someone you’ve hired to
complete work on your home, be sure to document your actions
carefully. Put complaints in writing and save a dated copy in your
files. Make notes on what happened and when, carefully logging phone
calls and emails. Truly, it’s best to try to work things out with the
disputing party before taking complicated next steps. But if the two
parties cannot come to an agreement, there is a mediation option
through many professional organizations or through the State
Department of Regulation and Licensing. If an agreement cannot be
reached through discussion or professional mediation, small claims
court or individual legal action may be necessary.
**A thorough vetting process before choosing your contractors will
greatly reduce the chance for disputes.
10 Contractor-Scam Warning Signs
================================
Here are a few things to watch for when you first come in contact with
contractors.
Adapted from Motley Fool
Warning Sign 1: Scare tactics
"Well, your chimney looks about ready to fall over. If that lands on
someone's head -- they're a goner. And you could have one dandy
lawsuit."
Warning Sign 2: The hasty quote on a big job
"I figure $5,800 should do it," says the contractor as he glances at
the complicated repair, then quickly scribbles a number on a scrap of
paper.
Warning Sign 3: No identification
"Sorry. I forgot my business cards. You can always look us up at our
post office box address."
Warning Sign 4: Refusal to provide referrals
"We don't give out customer names. We respect their privacy. You
understand, don't you? I'm sure you wouldn't want me to give out your
name to strangers."
Warning Sign 5: Pressure tactics
"You'll have to sign up now. The manufacturer says the prices are
going up right away."
Warning Sign 6: In the neighborhood
"I've just resurfaced your neighbor's driveway and I've got materials
left over to do yours. Looks like it needs work soon. I'll give you a
really good deal."
Warning Sign 7: Up-front payment
"That's going to involve a lot of materials. I'll have to ask you to
pay me now."
Warning Sign 8: Refusal to provide a written guarantee
"If anything goes wrong, just call me. You have my word."
Warning Sign 9: Under the table deals
"I can give you a good deal for cash."
Warning Sign 10: Referral selling
"There's a big rebate for you if you refer customers to us." Or:
"You'll get a special discounted price if we can use your home as a
model to show off our work. We'll just put a sign on the front yard."
Finally, here's an eleventh tip, for free: Use your common sense to
detect warning signs. Trust your instincts!
Source: http://www.fool.com/homecenter/smart/smart06.htm
H
Warning:
Increased property value can also result in higher municipal
assessments, leading to higher taxes. You should also check with your
insurance company post-renovation to ensure you’re still adequately
covered.
ow much value will it add?
You’ve completed the work, and now you want to know what your house is
worth. Unfortunately, we do not get a dollar-for-dollar return on our
home improvement investments—at least not right away. It is important
to do home improvements for the right reasons (to use and enjoy them)
rather than the misguided ones (to dramatically increase value and/or
buy and sell a house for quick profit).
There are multiple facets of a home improvement’s return on
investment. The return comes in the added pleasure of living in a
space that now better serves our family’s needs. It comes from the
pride and happiness we feel as owners of the property. And it will,
gradually, come more and more in home value appreciation as time goes
on.
The money spent on improvements does also have some immediate monetary
value reflected in the home. The precise level of that value cannot
truly be measured by a chart or graph, but rather by the very
particular real estate market our home is in. However, at least one
group puts together an annual report charting the average returns of
some of the most common large-scale remodeling projects. That chart of
average “Cost Versus Value” is listed below and available online at
http://www.costvsvalue.com.
2008 Cost Versus Value Report, Mid-Range Projects (in contrast to
High-End)
Project
Midwest Region
(WI, MI, OH, IN, IL)
Cost Recouped
Madison Area Average Cost Recouped
Milwaukee Area Average Cost Recouped
Attic Bedroom
64.3%
69.9%
66.7%
Basement Remodel
59.1%
58.2%
56.5%
Bathroom Addition
55.6%
60.7%
63.1%
Bathroom Remodel
64.3%
65.3%
69.2%
Deck Addition (composite)
64.2%
69.2%
61.5%
Deck Addition (wood)
68.9%
72.7%
71.3%
Family Room Addition
57.9%
65.3%
65.4%
Garage Addition
55.9%
62.8%
55.8%
Home Office Remodel
45.6%
47.5%
45.4%
Major Kitchen Remodel
66.5%
71.2%
70.8%
Master Suite Addition
58.3%
62.1%
64.1%
Minor Kitchen Remodel
69.1%
76.3%
75.2%
Roofing Replacement
54.7%
57.0%
61.2%
Siding Replacement
73.0%
83.9%
80.6%
Sunroom Addition
51.3%
58.4%
56.3%
Two-Story Addition
61.5%
60.9%
68.3%
Window Replacement (vinyl)
67.1%
76.2%
74.1%
Window Replacement (wood)
67.3%
74.9%
70.6%
© 2008 Hanley Wood, LLC. Complete city data from Remodeling 2008–09
Cost vs. Value Report. Download free at www.costvsvalue.com.
Do It Yourself
After calling contractors and getting estimates, you may be asking
yourself if it is worth the money to hire someone instead of doing the
work yourself. The correct answer to this predicament is unique to
every individual, but here are some things to consider.
Should you do it yourself?
Ask yourself the following questions to determine if it will be a good
idea for you to take on your home improvements on your own:
1.
Have you ever done work like this before?
If so, how long has it been and how confident do you feel?
2.
Do you have the necessary tools to complete the job?
If you have just moved into your own house, or simply haven’t had to
complete large projects before, you may be surprised at all the tools
you’ll need. Consider borrowing or renting large ticket items you’ll
only need once. If you do purchase new tools, hardware store bills can
eat into the cost savings of doing it yourself. On the other hand,
then you can keep the tools for use on future projects.
3.
Do you have enough help to complete the job?
Many tasks require more than one person, or someone to help carry or
hold up weighty materials.
4.
Do you know anyone personally who has done this work before and
could be there as a resource if you run into unexpected problems?
5.
Do you have the time to complete the job?
Have you researched the amount of time it will take to complete the
job? Be sure to add another 50% to your estimate for unexpected snags
and delays. Be realistic about what your time is worth, and whether or
not the savings are worth it.
6.
Do you have the desire to complete the job?
Wanting to save money and truly having the initiative to complete a
home improvement project do not always go hand in hand. Unless you are
confident you can commit to the work and follow through, it is
probably best not to start. You may find yourself bogged down for
months or years with a half-finished project.
7.
How concerned are you with perfection?
If you are the kind of person who will not settle for less than
perfect, you may drive yourself crazy trying to match the work of
professionals. A professional is good at what they do because they
have years of practice. If you are a novice, do not expect your
project to be perfect. But with some dedication and the right
attitude, you may find that it’s perfect enough for you.
8.
Is this the kind of work that should be handled by a professional?
Most Electrical, Plumbing, and HVAC work should really be handled by
professionals in order to avoid unsafe conditions and costly repairs
down the road. It is never worth risking your safety to try to
complete a task on your own. This is also something to consider before
you begin climbing on the roof.
Financing Home Improvements
When it comes to financing home improvement projects, there are four
possibilities most commonly used: Home Improvement Loan, Home Equity
Line of Credit, Cash-Out Refinancing, or Self-Financing.
Cost over-runs
It is almost impossible to calculate costs accurately in advance of
beginning a project. Hurdles almost always reveal themselves once you
or your contractor has begun a home improvement project. Please keep
this in mind when estimating costs and obtaining financing. A good
rule of thumb is to assume your costs will run 10% over original
estimates, but even this can be tested if you run into major
complications. Don’t get caught off guard; expect the worse and hope
for the best!
Home improvement loan
Also known as a “home equity loan,” a home improvement loan happens
when a homeowners goes to their lender and takes out a loan to pay for
improvements, secured by the equity you’ve built by paying off your
monthly mortgage. If you’ve only recently purchased your home, it is
possible that you will not have the equity required to convince the
bank to lend you additional money. However if you do have some equity
in your home, or are willing to compensate for less equity by paying a
higher interest rate, your lender will likely want to lend you money
to keep your investment in good condition.
Most often, a home improvement loan will have rates slightly higher
than conventional mortgage rates. However, the interest rate is fixed
for the life of the loan, and you may be able to write off the
interest paid on your income taxes. Also, you will receive the loan
amount in one lump sum, great for paying a contractor or other
professionals. Like a mortgage loan, your terms and interest rates
will depend greatly on your credit score and how much equity you
currently have in your home.
Example Loan Rates
Loan Amount
Interest Rate
Term of Loan
Monthly Payment
5,000
7.0 %
30 year fixed
31.38
5,000
7.5 %
30 year fixed
32.82
5,000
8.0 %
30 year fixed
34.27
5,000
8.5 %
30 year fixed
35.73
10,000
7.0 %
30 year fixed
62.76
10,000
7.5 %
30 year fixed
65.64
10,000
8.0 %
30 year fixed
68.54
10,000
8.5 %
30 year fixed
71.47
40,000
7.0 %
30 year fixed
251.05
40,000
7.5 %
30 year fixed
262.55
40,000
8.0 %
30 year fixed
274.16
40,000
8.5 %
30 year fixed
285.87
**Loan rates and terms are unique for every individual and based on
credit history, home equity, and other factors. The rates above may
not be available to you due to your determining factors and/or current
federal interest rates and policies.
Home Equity Lines of Credit
Often abbreviated as HELOC’s, a home equity line of credit is similar
to a credit card, in that you can spend your funds in small or large
increments up to your credit limit. For projects with stretched-out
timelines, this is a benefit because until you borrow the entire
amount, you are not responsible to pay interest on it.
HELOC rates can be lower than home improvement loan rates, and lenders
may be more likely to approve HELOC’s. HOWEVER, the interest rate is
typically a variable rate, meaning it can go up over time. Some
lenders may offer lower introductory periods, but then rates become
larger and variable after a certain period of time. Also, there may be
annual membership fees to keep the line of credit open, or transaction
fees associated with each charge.
Cash-out refinance
This option is not for everyone, but it could be right for you. If
your current mortgage loan is at a high interest rate and you are
thinking of refinancing, you may be able to refinance your mortgage
into a lower rate, and take out some cash in equity at that time. If
you already have a competitive mortgage interest rate, the cost to
refinance is probably not worth it. But for the right family, cash-out
refinancing is a nice option that both provides you with an injection
of cash for improvements, and may also lower your monthly mortgage
payment.
Self-financing
Clearly the least expensive way to finance your home improvements is
to save that money on interest and finance the remodeling yourself. If
you have not had luck planning and saving in the past, all hope is not
lost. A home improvement is a terrifically motivating goal for which
to save. Sit down with your family or a financial planner, set your
monetary goal and your time frame, and start putting away a little
every month until you’ve saved enough. The deep satisfaction you’ll
feel from this accomplishment will make the home improvements even
sweeter!
Sample Saving Plan
Financial Goal
Monthly Savings Required
Weekly Savings Required
Months Until Goal is Reached
1,000
166.67
38.46
6
1,000
83.33
19.23
12
1,000
41.67
9.62
24
2,000
333.33
76.92
6
2,000
166.67
38.46
12
2,000
83.33
19.23
24
2,000
55.56
12.82
36
5,000
416.67
96.15
12
5,000
208.83
48.08
24
5,000
138.89
32.05
36
Pull cash out of investments?
Perhaps you already have investments or retirement accounts which you
could draw on to finance home improvements. While cashing out
investments might be the best solution, seldom is pulling cash out of
your retirement account. The tax-free benefits of a retirement account
are lost as soon as you pull money from it, as may be the
employer-match benefit. Putting the money back later is very difficult
because you will also lose the interest that could have accumulated
while you had the money out. For retirement accounts, this can be an
amount many times the borrowed dollar amount.
Family loan
If you are in the enviable position of having a willing family member
to make you a loan, please do one thing. Thoroughly document the loan
terms and agreements, getting all parties’ signatures, as well as a
witness. This is important to avoid future misunderstandings if one
party remembers things differently. Also, should tragedy strike a
party, the document should clearly lay out the agreed upon courses of
action (e.g. that the estate take over the loan, and it is NOT
immediately due in full).
Alternative options
In addition to the bank loans mentioned above, you may qualify for
special financing if your income is below a certain level or if you
live in a particular area (for example, a rural home). If you have
reason to believe you may qualify for special financing, be sure to
explore some alternative options when shopping for home improvement
financing. Some helpful suggestions include:
Wisconsin Housing and Economic Development Authority (WHEDA)
WHEDA is an independent state authority that works with lenders to
provide low‐cost financing for housing and small business development
in Wisconsin. One example of such a program is the WHEDA Home
Improvement Advantage loan, offering up to $10,000 at a fixed rate for
home improvements or repairs. For more information on WHEDA’s housing
programs, call 1‐800‐334‐6873 or visit WHEDA’s web site www.wheda.com.
USDA Rural Development Loans
The USDA grants money to local agencies (Housing Preservation Grants)
to use in helping low and very-low income families to rehabilitate
their homes. To contact the Wisconsin offices of the USDA to see what
they are currently offering for assistance, call 715-345-7620 or go to
their website: http://www.rurdev.usda.gov/wi.
Community Development Block Grants
Like the USDA does on the federal level, the state of Wisconsin also
provides grants to local municipalities which is pegged specifically
for home and neighborhood improvement uses. The grants given to
communities are called Community Development Block Grants or “CDBG”s.
To see if your community or your local agencies have some of these
funds available, call (608) 261-6535, or see this terrific guide for
opportunities available:
http://commerce.wi.gov/CD/docs/BOH-Fact-Sheets/cd-boh-housing.pdf.
Your Municipality or County
Check with your city, village, town, or county to see if they offer
local incentives.
Paying Off Your Mortgage
Whether it is a home equity loan, or a first or second mortgage, every
homeowner dreams of the day they make that final payment and free up a
substantial portion of their income. Options of doing so include
paying off the loan over its designated term (e.g. 30 years), paying
off the loan in a lump sum, or paying off the loan ahead of schedule
by submitting accelerated payments over time. While many homeowners
use the first strategy, this section focuses on pros and cons of the
latter two.
Overall, Americans are lucky in that we have the ability to spread out
our home debt into affordable monthly bite-sized portions, unlike
other parts of the developing world. This opportunity to spread out
payments across years allows us to purchase a home at a younger age,
and do so without being forced to save an amount equal to the entire
cost of the home. Of course the negative is that we are only able to
do so by paying a lender interest for the service, rather than
enjoying that portion of the monthly payments ourselves.
Accelerated payments
There are a number of ways to accelerate your mortgage payments, and
this is very shrewd as long as your loan does not have a pre-payment
penalty. A pre-payment penalty allows the lender to not apply the
entire amount of additional payments to pay down your principal, but
instead lets them keep a portion. Most loans today do not have a
pre-payment penalty, so by using any number of strategies, you can
avoid future interest and pay off your loan faster by increasing your
scheduled monthly mortgage payments.
Some choose to make payments out of their paychecks bi-weekly instead
of monthly, increasing (sometimes doubling) the monthly contributions.
Others just add a bit extra each month, or when they have spare income
certain times of year.
Lump sum pay-Off
If you come into a large sum of money through an inheritance or other
means, you may consider paying off your mortgage. Of course, you may
also be weighing other uses of the money like investment in the stock
market, a CD, or another venture. Are there uses of the money that
produce higher benefits than paying off your mortgage?
Supplemental Materials
The supplemental materials included in this chapter are outlined
below. Feel free to photocopy or print these materials and use them as
needed.
Handout: Additional Resources
Phone numbers and web links for resources related to this topic.
Additional Resources handout
Home Inspection
*
The Wisconsin Association of Home Inspectors: (877) 399-WAHI,
http://www.wahigroup.com/wahi_members.php
*
The National Association of Home Inspectors: (800) 448-3942,
http://www.nahi.org/wi-wisconsin-home-inspector.asp
*
The Department of Regulation and Licensing: ( 877 ) 617-1565,
http://drl.wi.gov/index.htm
Homeowner’s Insurance
*
The Wisconsin Consumer’s Guide to Homeowners Insurance: Call the
Office of the Commissioner of Insurance at (608) 266-0103 for a
mailed copy or download for free at
http://oci.wi.gov/pub_list/pi-015.pdf
Background checks
*
Department of Regulation and Licensing: http://www.drl.wi.gov
*
Wisconsin Circuit Courts System: http://wcca.wicourts.gov
Energy Efficiency
*
Focus on Energy: 800.762.7077, http://www.focusonenergy.com
*
Wisconsin Division of Energy Services: 1-866-HEATWIS (432-8947);
http://www.homeenergyplus.wi.gov
*
Energy Star, US Department of Energy:
http://www.energystar.gov/index.cfm?c=home.index
Alternative Financing Options
*
Wisconsin Housing and Economic Development Authority (WHEDA): 1‐800‐334‐6873,
http://www.wheda.com.
*
USDA Rural Development Loans: 715-345-7620;
http://www.rurdev.usda.gov/wi.
*
Community Development Block Grants: (608) 261-6535;
http://commerce.wi.gov/CD/docs/BOH-Fact-Sheets/cd-boh-housing.pdf.
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WHPE