Be prepared for a home remodelDate posted: 3/5/14 08:00:00 AM
There is a growing number of homeowners looking to take on home remodeling projects in 2014, according to the National Association of Homebuilders. The average zip code throughout the country will spend more than $5 million on home improvements by the end of the year.
The top five zip codes with the heftiest home improvement price tags are all located in Maryland, Texas and Illinois. Each of those five zip codes has at least 15,000 owner-occupied homes. Homeowners living in the top renovating zip codes have an average income of $145,000 and 60 percent or more are college educated.
The NAHB reported that most of the top five zip codes aren't flooded with unusually large homes.
Tackling a home renovation project
The typical homeowner in the average zip code will spend less than $1,600 on home improvements in 2014. While some of the renovations gearing for kickoff are relatively straightforward - a new front door or a wooden deck - others are fairly complicated. Homeowners choosing the latter should make sure to fully protect their assets by making sure they asses all the risks of a major home renovation.
There are a few pieces of advice that homeowners should heed before diving into a renovation project. One of the most important aspects for homeowners to keep their finances intact is letting their insurance company know about the remodeling project.
"If homeowners neglect to tell their insurance agent about a renovation, it puts them at risk from a liability standpoint," Mark McCormick, technical director of personal risk services at Fireman's Fund Insurance Company, told The Westerly Sun. "People might be walking around on roofs, putting in swimming pools, using open flame, putting up siding, all kinds of things. If the policy holder talks to an agent about the scope of project, the agent can advise an increase in liability coverage if it's needed."
McCormick said that before work begins, homeowners should contact their insurance provider and ask if there is anything that should be done to minimize risk, including asking about the need to adjust liability limits.
Larger renovation projects are obviously riskier than a smaller remodel, so if a family decides to go big, an insurer might suggest adding security fencing or cameras to keep all of the materials and tools - and the home - safe.
If a homeowner is set on a particular rehab projection but can't afford the cost, they should consider a home equity line of credit through a financial institution or bank. This allows them a line of credit to spend on home renovation. The lender then asks the homeowner to put their home down as collateral to minimize their risk.
Finding the right person for the job
If a homeowner isn't going to take on the home improvement project by themselves, it's crucial to land the right kind of help.
"It always goes back to choosing the right contractor," McCormick said. "Embarking on these kinds of projects is an emotional experience, but it's important to objectively vet your contractors before making a decision about who will be working in your home."
McCormick urges homeowners to make sure any prospective hire has been in the contracting business for a number of years to help warrant their trustworthiness. He said that contracting companies that have been around for a while also should have more connections in the community, allowing a homeowner to ask or check out other properties that a particular company has renovated.
"It's always good to get three to five contractors into the vetting process," McCormick said.
Homeowners should also ask friends and neighbors that have recently been through a remodeling project for any recommendations.
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