When to Use Home Equity and When Not To

With home prices rising in most areas of the country, a lot of us are building home equity again. And when equity builds, it's tempting to tap it.

Used wisely, home equity can send your kids to college or launch a business. But there's a real risk to using home equity loans (http://www.houselogic.com/home-advice/equity-loans/drawbacks-home-equity-loans/) - they can make you more susceptible to foreclosure.

A recent Federal Reserve study found 30% of Los Angeles homeowners who lost their houses during the foreclosure (http://www.houselogic.com/home-advice/facing-foreclosure/facing-foreclosure-what-do-right-now/) crisis wouldn't have defaulted had they not cashed out their home equity (http://www.houselogic.com/home-advice/equity-loans/home-equity-line-tips/).

The researchers said borrowing against your home equity (http://www.houselogic.com/home-advice/equity-loans/equity-loan-options/) causes problems for a few reasons:

          •Your payments go up (if your total mortgage gets bigger).

          •If home prices fall, you have less equity to lose. That might make you more tempted to walk away from your home.

          •If you're hit by a financial whammy, your financial cushion is thinner.

When to Use Home Equity

Despite that Federal Reserve study, home equity can be a smart tool when you want to build family wealth. During the past two decades, I've repeatedly used home equity to buy and renovate rental properties (http://www.houselogic.com/home-advice/taxes-incentives/should-i-rent-or-sell-my-house/). When the value of a rental property rises, you can refinance, pull cash out, and buy another rental property - although with credit so tight, that's been tougher to do lately.

Related: There's no surer way to wealth than home ownership (http://www.houselogic.com/blog/why-home-ownership-matters/facebook-ipo-home-equity/).

During part of those same two decades, my husband worked as a loan officer. A lot of his clients repeatedly refinanced to pull equity from their homes to pay off credit card bills. Although I enjoyed the income those deals created for my family, I think his clients were foolhardy for financing clothes and dinners into years of home loan payments.

Thinking about cashing out your home equity to buy something? Answering two questions can tell you if you're unnecessarily putting your home at risk:

Question #1: Is the item you plan to buy with your equity going to go up in value (appreciate) or lose value after you buy it (depreciate)?

If it's an appreciating asset, it makes sense to use home equity to buy it. You're buying something with a future payoff. Things I would put into the appreciating asset category:

          •Training or education (It makes you more valuable in the workplace.)

          •Buying rental real estate (http://www.houselogic.com/home-advice/home-thoughts/how-rent-your-home/)

          •Improving your home (Check the cost vs. value (http://www.houselogic.com/home-topics/cost-v-value/) of certain remodeling projects.)

          •Starting or buying a business (if you're ready to gamble your house on its success)

If it's a depreciating asset, don't use home equity to buy it. Things I would put into the depreciating asset category:

          •Anything you eat

          •Stuff you wear

          •Most vehicles

          •My husband's Harley (although he'll argue it holds its value)

Question #2: Will you still be using the item 10 years from now?

Whatever you're buying should last at least as long as your payments.

There are probably some items of clothing that you could arguably still be wearing 10 years from now, say, Frye boots. I might believe you'll still be driving a car 10 years from now. My 8-year-old Subaru Legacy wagon is still going strong. But, there are two reasons you're better off with an auto loan than a home equity line (http://www.houselogic.com/home-advice/equity-loans/home-equity-line-tips/), even though you'll probably pay a higher interest rate on a car loan.

The length of your car loan is going to match the lifespan of your car (unless you own my car, in which case your car will keep going long after you pay off the loan).

If an adverse life event causes you to crash and burn financially and you can't make the car loan payment, the bank will repossess your car. If you pay for the car with a home equity line and fail to make the payment, you could lose your home.

Now that I've completely bummed you out thinking about your car being repossessed, let me share with you one last great motivation to avoid spending your home equity:

When you grow old and can't take care of yourself anymore, your kids can sell your house and use that equity to put you in a beautiful nursing home. Spend it all now and you're going to end up having to move in with them.

What's your take on equity loans? What have you financed with the funds?

Article From HouseLogic.com

By: Dona DeZube
Published: June 28, 2013

Big upgrades for tiny remodeling budgets

Not everyone has a fortune stashed away for a major home remodel. So smaller-scale projects, such as replacing windows, siding or a front door, are gaining in popularity among homeowners.

Compared with a full remodel, replacement projects cost less and can offer a better return on investment. This year, homeowners are recouping 67.6% of the cost of smaller-scale replacement projects during resale, according to Remodeling Magazine's annual Cost vs. Value report. Major remodeling projects, such as additions, are recouping 59.7%, on average.

Whether you want to make upgrades for your own enjoyment or you plan to sell your house soon, we've rounded up nine home-improvement projects that will give you the most bang for your buck for about $1,000 or less.

As you plan your project, keep in mind that many of the prices quoted here are national averages. The actual cost of any renovation will vary, based on the location of the home, the scope of the work, the quality of the materials and the experience of the contractor.

Caulk windows and weather-strip doorways

Caulking windows and applying weather stripping to exterior doorways will make your home more energy-efficient by sealing major sources of air leaks. This can help cut down your cooling bills during the summer and heating bills in winter.

Many homeowners tackle these tasks themselves. A DIY caulking job costs $50 including materials, such as a caulk gun and 12 caulk cartridges, according to DIYorNot.com, a website that provides cost projections for common home-improvement projects. If you aren't handy around the house, you can hire someone to do the work for $144, on average. That includes labor and materials.

Applying weather stripping and updating an exterior door's threshold yourself will cost $65; a professional can do it for $95 per door.

Install under-cabinet lighting in the kitchen

Adding under-cabinet lighting in your kitchen illuminates work surfaces —a plus for home cooks — and can make the space appear less dated — a plus for future buyers. Because there can be a bit of wiring involved to connect multiple fixtures, not to mention drilling holes in expensive cabinetry, you might want to leave this project to a pro. The average cost of hiring an electrician to install three 14-inch surface-mounted lighting fixtures that plug into an existing receptacle is $142, according to DIYorNot.com. A qualified pro can easily handle this project, as well, because no hard wiring is necessary inside the walls. The cost and complexity will be much higher if a receptacle must be added.

Update the kitchen-cabinet hardware

If you have a limited budget, a full-scale kitchen remodel is not an option, considering that a midrange renovation averages about $54,000. You can, however, make small tweaks to freshen up the space.

Updating the hardware on your kitchen cabinets and drawers is cost-friendly and doesn't require professional help, says Donna Shirey, owner of Shirey Handyman Service, a Seattle home-repair company.

As long as your cabinets are in good condition, swapping out dated hardware will give your cabinets an instant facelift.

"It'll cost you about $5 to $10 per handle, depending on the finish," Shirey says.

So if you have 25 cabinet-door and drawer handles in your kitchen that must be replaced, expect to pay as much as $250.

Add crown molding in the living room

Crown molding can bring a touch of luxury to a living room without a luxurious price tag. Having a carpenter install crown molding where the walls meet the ceiling in a 12-by-20-foot room costs about $330. That's the national average for 70 linear feet of installed finger-joint pine crown molding, according to DIYorNot.com. Adding a chair rail — molding attached to walls at roughly the height of a chair back — can also give a room a finished look says Neil Parsons, owner of Design Build Pros, a Toms River, N.J., remodeling firm. Parsons suggests painting the walls different shades above and below the chair-rail molding to make a room stand out.

Keep in mind, though, that molding should be added for your own aesthetic enjoyment rather than for resale value. If your remodeling budget is tight, focus your resources on the kitchen and bathrooms first.

Install a tile backsplash in the kitchen

Up the "wow" factor in your kitchen by adding a tile backsplash. Ceramic and porcelain tiles are the most popular tile finishes; however, ceramic tile costs less. At Home Depot, for example, you can buy ceramic tile for as little as $1.12 per square foot. Porcelain tile starts at $3.65 per square foot.

The average cost to hire a tile contractor to install a 10-foot-long, 12-inch-high ceramic-tile backsplash is $388. That includes about six hours' worth of labor and materials such as tiles, moisture-resistant adhesive and grout, according to DIYorNot.com. While a professional will almost certainly do a better job, skilled homeowners should be able to complete the project themselves for less money, says Paul Sullivan, founder and president of the Sullivan Co., a Newton, Mass., remodeling and custom-building firm.

Add or paint shutters

If you have a smaller home with no more than five to eight front windows without shutters, consider adding some to improve the curb appeal, Sullivan says. On a $1,000 budget, you'll likely only be able to afford vinyl shutters, which start at $21 per pair at Home Depot; wooden shutters start at $46 per pair. You'll spend the remainder of your $1,000 budget having a professional install them.

If you already have exterior shutters, and they're in good condition, apply a fresh coat of paint to give them new life. The cost of hiring a painter to update exterior shutters varies by location, but it can be less than $1,000, depending on the quality of the paint and other materials, such as primer. In Washington, D.C., for example, the average cost of painting 16 shutters for eight windows starts at $581.55, according to Homewyse.com, which offers cost projections for labor and materials. In Seattle, it'll run you $650.81.

Replace fixtures in the bathroom

Consider swapping the existing fixtures in your bathroom, such as the toilet, faucets and shower head, for high-efficiency versions, Sullivan says.

"Not only are you getting an updated look in your bathroom, but you'll also be saving money on your water bill," he says. Replacing an old toilet with an efficient model, for example, can save the average family $110 a year on water bills, the Environmental Protection Agency says.

At Home Depot, you can buy a WaterSense-rated, two-piece toilet for as little as $139. A high-efficiency faucet for the sink starts at $31.48, and a tub faucet and shower-head combo starts at $49.98.

Hiring a plumber to remove your old toilet and replace it with a new one will cost $459, on average, according to DIYorNot.com. Changing a single-control faucet on a bathroom sink costs $254, and replacing a shower head costs $155. Having all three completed at the same time adds as much as $868.

Apply a fresh coat of paint

Professional home-stagers recommend painting the interior a neutral color, such as taupe or cream, to make spaces feel larger. But a whole-house paint job is expensive. On average, a homeowner will spend $2,039 to hire someone to paint the entire interior of a house, according to HomeAdvisor.com, a renovation website.

To keep the project under $1,000, focus on the most visible areas, such as the entry, kitchen, main-level bathroom and family room or living room.

Painting is another project that many homeowners do themselves to cut costs. Remember to factor in the price of paint, primer, painters' tape, brushes and rollers when setting a budget. Costs can vary considerably by brand. A gallon of Benjamin Moore paint can cost two to three times more than a gallon of Behr, for example.

Replace the front door

This project is for homeowners who want the highest payback from a renovation when they eventually sell the house. According to Remodeling Magazine's Cost vs. Value report, replacing a front door with a new steel door will result in a nearly 86% return on the investment at resale. That's the best ROI for any projects in the report. Granted, the national average cost for a replacement steel entry door is $1,137, slightly above our budget, but we made an exception because homeowners are likely to recoup most of that expense.

Curious about the home-improvement project with the lowest return at resale? It's a home-office remodel, which recoups just 44% of the original cost.

By Andrea N. Browne of Kiplinger
Source: http://realestate.msn.com/big-upgrades-for-tiny-remodeling-budgets

How to Keep Your House Cool Without AC

Want summer comfort but hate the AC? Follow these tips, and you'll keep your house cool without frosty air conditioning.

You don't have to switch on the air conditioner to get a big chill this summer. These tips will help you keep your house cool without AC, which will save energy (http://www.houselogic.com/green-living/saving-energy/) (and avoid AC wars (http://www.houselogic.com/blog/heating-cooling/air-conditioning-temperature/) with your family).

Block that Sun!

When sunlight enters your house, it turns into heat. You'll keep your house cooler if you reduce solar heat gain by keeping sunlight out.

          •Close the drapes: Line them with light-colored fabric that reflects the sun, and close them during the hottest part of the day. Let them pillow onto the floor to block air movement.

          •Add awnings: Install them on south- and west-facing windows to reduce solar heat gain by up to 77%, says the U.S. Department of Energy. Make your own by tacking up sheets outside your windows and draping the ends over a railing or lawn chair.

          •Install shutters: Interior and exterior shutters not only reduce heat gain and loss, but they also add security and protect against bad weather. Interior shutters with adjustable slats let you control how much sun you let in.

          •Apply high-reflectivity window film: Install energy-saving window films (http://www.houselogic.com/blog/windows-doors/window-film-energy-savings/) on east- and west-facing windows, which will keep you cool in summer, but let in warming sun in the winter. Mirror-like films are more effective than colored transparent films.

Here's more information about energy-efficient window coverings (http://www.houselogic.com/home-advice/windows-doors/save-money-energy-efficient-window-coverings/).

Open Those Windows

Be sure to open windows when the outside temperature is lower than the inside. Cool air helps lower the temps of everything - walls, floors, furniture - items that will absorb heat as temps rise, helping inside air say cooler longer.

To create cross-ventilation, open windows on opposite sides of the house. Good ventilation helps reduce VOCs (http://www.houselogic.com/home-advice/air-quality/how-to-reduce-voc-exposure/) and prevents mold (http://www.houselogic.com/home-advice/air-quality/how-to-prevent-mold-damage/).

Fire Up Fans

          •Portable fans: At night, place fans in open windows to move cool air. In the day, put fans where you feel their cooling breezes (moving air evaporates perspiration and lowers your body temperature). To get extra cool, place glasses or bowls of ice water in front of fans, which will chill the moving air.

          •Ceiling fans: For maximum cooling effect, make sure ceiling fans (http://www.houselogic.com/home-advice/heating-cooling/installing-ceiling-fans-at-home/) spin in the direction that pushes air down, rather than sucks it up. Be sure to turn off fans when you're not in the room, because fan motors give off heat, too.

          •Whole house fans: A whole-house fan (http://www.houselogic.com/home-advice/heating-cooling/whole-house-fans-maximum-cool-minimum-cost/) ($1,150-$1,500, including install) exhausts hot inside air out through roof vents. Make sure your windows are open when you run a whole-house fan.

Power Down Appliances

You'll save money and reduce heat output by turning off appliances (http://www.houselogic.com/maintenance-repair/preventative-home-maintenance/appliances/) you're not using, particularly your computer and television. Powering down multiple appliances is easier if you connect them to the same power strip.

Don't use heat- and steam-generating appliances - ranges, ovens, washers, dryers -- during the hottest part of the day. In fact, take advantage of the heat by drying clothes outside on a line.

Plant Trees and Vines

These green house-coolers shade (http://www.houselogic.com/blog/patios/quick-ways-make-some-shade-dont-forget-trees-are-best/) your home's exterior and keep sunlight out of windows. Plant them by south- and west-facing walls, where the sun is strongest.

Deciduous trees, which leaf out in spring and drop leaves in fall, are best because they provide shade in summer, then let in sun when temperatures drop in autumn. Select trees that are native to your area, which have a better chance of surviving. When planting, determine the height, canopy width, and root spread of the mature tree and plant accordingly.

Climbing vines, such as ivy or Virginia creeper, also are good outside insulators. To prevent vine rootlets or tendrils from compromising your siding, grow them on trellises or wires about 6 in. away from the house.

Speaking of shade, here are smart, inexpensive ideas for shading your patio (http://www.houselogic.com/home-advice/patios/patio-shade-ideas-under-300/).

Want more tips for staying cool this summer? Substitute CFL and LED bulbs (http://www.houselogic.com/news/lighting/leds-outshine-cfls-consumer-reports-latest-lightbulb-tests/) for hotter incandescent lights.

Also, try insulating your garage door (http://www.houselogic.com/home-advice/insulation/how-to-insulate-a-garage-door/) to prevent heat buildup.

Article From HouseLogic.com

By: Lisa Kaplan Gordon
Published: March 20, 2013

5 Deck Makeover Projects Under $300

Want to upgrade your deck but watching your budget? Here are 5 easy deck makeover ideas, many well under $300.

1. Add solar lighting

If you'd like your wood deck (http://www.houselogic.com/outdoors/decks/) to come alive when the sun goes down, add solar lighting. Solar lights don't need an on/off switch -- they light up when it gets dark, then fade away 4-6 hours later.

You won't have to plug them in or wire anything, either. Their solar-charged batteries are renewed every day, and the lights are built to withstand all kinds of weather.

Types and cost:

          •Paper lanterns (made from synthetic, weatherproof nylon; $20-$30) are made for hanging and come in all sorts of fun shapes, sizes, and colors.

          •Carriage lights can be fixed on top of a pillar or railing newel post. $45-$150.

          •Solar illuminated replicas of old-fashioned mason jars can be set on any flat surface, about $35.

          •Rope lights have small LED bulbs (http://www.houselogic.com/news/lighting/consumer-reports-shines-light-best-cfl-and-led-bulbs/) inside a flexible cord. A 25-foot-long rope with solar charger and stand is $25.

What else: Suspend lanterns from overhead trellises, railings, and nearby trees, where they'll shed a soft, colorful glow. Wind rope lights around rafters and railings.

2. Install a stone landing at the foot of your deck stairs (http://www.houselogic.com/home-advice/decks/deck-makeover-ideas-under-300/2/)
3. Put up a privacy screen (http://www.houselogic.com/home-advice/decks/deck-makeover-ideas-under-300/3/)
4. Paint a faux floor rug on your decking (http://www.houselogic.com/home-advice/decks/deck-makeover-ideas-under-300/4/)
5. Wash and refinish your wood decking (http://www.houselogic.com/home-advice/decks/deck-makeover-ideas-under-300/5/)

 2. Install a stone landing at the foot of your deck stairs

Dress up the transition from your deck to your yard with a little hardscaping -- a stone landing at the bottom of your deck stairs. Stones are a natural compliment to wood decks, and they'll help prevent mud from forming where there's heavy foot traffic.

Cost: Flagstone is priced by the pound; you'll spend $60-$100 for enough stone for a 3-by-4-foot landing.

How-to: Techniques for installing a landing are the same as putting in a patio (http://www.houselogic.com/outdoors/patios/), although you'll have to temporarily support your existing stairway while you work around - and under - it.

What else: You should be able to add a landing in less than a day. It'll get done faster if you hire a pro, but it'll cost you another $150-$200 in labor.

3. Put up a privacy screen

Whether you're relaxing alone au naturel or entertaining friends, a little home privacy (http://www.houselogic.com/home-topics/home-privacy/) is always welcome. You can add some vertical supports and fill in a variety of cool screening materials that are as nice for your neighbors to look at as they are for you.

Types and costs:

          •Bamboo fencing comes in a 6-by-16-foot roll for $20-$25.

          •Lattice panels are either wood or plastic, $15-$30 for a 4-by-8-foot panel.

          •Grow climbing plants on a trellis ($20-$100) to create a living privacy screen (http://www.houselogic.com/blog/patios/screens-protect-your-patios-right-privacy/). Plant climbing vines in tall containers (http://www.houselogic.com/photos/gardens/container-gardening-ideas/) ($40-$120) to raise them above the deck surface and give them a head start filling in your screen.

          •Outdoor fabric resists moisture and fading; $12-$120 per yard. You'll pay another $20 to have a seamstress cut and hem a 3-by-5-foot panel.

How-to: Your privacy screen should integrate with your deck; make the framework using the same basic materials as your deck railing and structure.



Add some flash by building a frame with 2-by-2- or 2-by-4-inch uprights spaced 1 foot apart, then weaving aluminum flashing between the uprights.

What else: Make sure to position your privacy screen where you'll get maximum benefit. Sit on your deck and check your lines of sight.

 4. Paint a faux floor rug on your decking

Punch up a boring old deck with a faux rug. This is a fairly low-cost project with a big wow factor, and one you can share making with your (well-behaved) kids. It works best on a newly cleaned deck (see below.)

Cost: Most of your cost will be deck stain or paint in various colors. Because you won't be using that much stain per color, you can buy quarts. Figure $15-$20 per quart.

How-to: Figure out a size, sketch out the design on your decking, and then all you have to do is paint or stain between the lines. You can use painter's tape as a guide, but a little leakage is likely on a wood decking surface.

What else: Keep a few basic cleaning supplies on hand for any drips or spills. After the stain is dry, coat the entire deck with a clear deck sealer.

5. Wash and refinish your wood decking

 

 The ultimate deck makeover is none other than a good cleaning. Applying a coat of deck sealant afterwards ensures your wood decking (http://www.houselogic.com/home-advice/decks/deck-options/) looks great and will last for decades.

Cost: There are many brands of deck cleaning and brightening solutions. Some require the deck to be wet; others need the decking to be dry. Some are harmful to plants and you'll have to use plastic sheeting to protect your landscaping. Consult the instructions carefully.

You'll pay $15-$25 per gallon, enough to clean 300 sq. ft. of decking.

How-to: Scrubbing with a good cleaning solution and rinsing with a garden hose is more foolproof than scouring your decking with a power washer that may damage the surface of the wood.


What else: After you deck is cleaned, apply a coat of deck stain or clear finish. The sealer wards off dirt, wear, and UV rays, and helps prevent deck splinters (http://www.houselogic.com/blog/decks/wood-deck-maintenance-prevent-splinters/). A gallon covers 250-350 sq. ft., $20-$35/gal.

Article From HouseLogic.com

By: John Riha
Published: July 02, 2012

Never Lose Stuff in Your House Again

Never Lose Stuff in Your House Again

Kitchen Remodeling Decisions You’ll Never Regret

http://www.houselogic.com/home-advice/kitchens/classic-kitchen-remodeling/?nicmp=social&nichn=hlfb&niseg=20130612_classickitchen

Think Your AC Won’t Make it Through the Summer? We’ve Got the Fixes

9 Simple DIY Weekend Decorating Projects