b e s t
CHOICES
cutting costs by 10 percent. But Lipford and
Fritschen say that it’s common to find them
slashing costs even more—by at least
20
percent.
Building materials such as lumber, drywall,
roofing, and insulation can be down as much as
15 percent, and good deals can be
had on appliances at large retailers like Lowe’s
and Home Depot. Overall, Fritschen of
RemodeIormove.com
says that renovating a
kitchen today costs
20
percent less than it did
before the economy cratered.
Contractors are ready
to deaJ i: Homeowner spending
on improvements is down,
so to fill their datebooks,
they are charging less.
3
Financing is cheap.
While the news has been of fore-
closures and homeowners “under
water”—owing more on their homes than what
they are worth—many people still have
substantial equity in their homes. Home equity
stands at around
68
percent, according to
research by Ohio State University, and tapping
home equity responsibly is not out of reach for
most Americans. What’s more, rates on home
equity lines of credit (HELOCs) are at historic
lows right now—around 5 percent on average
and often as low as prime (3.25 percent at the
time this story went to press).
Of course, it is definitely harder to qualify
for a HELOC today than it was a year or two
ago. But if you have three critical calling
cards—a steady job, a good credit score, and
home equity of
20
percent or more—you’ll find
bank doors wide open. “Certain banks have
stayed squeaky clean in this whole financial
meltdown, and they haven’t stopped lending at
all,” points out Cincinnati financial planner
John Evans. Many local banks will discount
their rate by .5-.65 percent if you bank with
them. “Once you adjust that rate for the fact
that you get a tax deduction,” he says, “you’re
looking at a rate around 2-2.5 percent,” making
for a “tremendous opportunity” to improve
your house at a low cost.
The cheapest option of all, of course, is to
use personal savings to pay for projects. In
BHG’s Home Improvement Challenge, nearly
50 percent of the entrants used savings or paid
as the project progressed; only one-quarter
used their home equity credit line.
4
You can save money for
years to come with
energy updates.
Not only will energy improvements reduce
your heating or cooling costs, they’ll earn you a
break on your April tax bill, making them smart
renovations. Under the stimulus package, you
can receive tax credits in 2009 and 2010 for 30
percent of the cost up to $1,500 for adding
insulation, installing new windows or doors, or
even replacing a roof. “The best money you can
spend on your home is in increasing your attic
insulation,” Lipford says. “It gives you an
instant improvement in your comfort level
summer and winter.” If you opt for renewable
energy, such as a solar water heater, solar
panels, or wind energy systems, you can claim
an even bigger tax break: 30 percent of the cost,
including installation, with no upper limit.
For a complete list of improvements
covered under the tax credit, look for the chart
on the Energy Star Web site (
energystar.gov
). In
addition, learn about your state’s incentives by
using the Database of State Incentives for
Renewables and Efficiency (
dsireusa.org
).
5
You can be set when the
market changes.
As home prices tumbled, sellers last
year recovered an average of just two-thirds of
the money they put into improvement projects
when they sold their homes, according to
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SEPTEMBER 2009 BETTER HOMES AND GARDENS
