A lot goes into building your dream home, whether that means starting from the plot space and building up or buying a house from a realtor. There is a huge number of things that you need to think about when it comes to your short-term and long-term goals. The best thing to remember for those who have recently gotten their first houses—you always want to improve, update, and renovate, and the more equity you have in your home the easier it is to make these changes. Even if you never plan on leaving your home, putting more money into the equity of your home will give you and your family a solid beginning to financial goals.
When Buying a House Built Several Years Ago
Many people think about their dream home as being something that needs to be built custom. However, that’s not true. Your dream home can come from a house built prior to your purchase of it. Most likely, this just means a little more time painting and renovating until it gets exactly where it needs to be for your goals.
It’s important to note that if you do go the way of buying a house for your dream home, you can possibly have multiple homes, since as you change your goals will change too. This is commonly the case with starter-homes and family-homes. Your dream starter-home will reflect whatever your priorities are at the time, be it work or friends or hobbies. Your dream family-home will then reflect that stage of your life—taking care of your spouse, your children, that will (hopefully) be a couple of decades in just the right home for you.
Never forget that simply buying a house off of the market means that it can’t be your dream home. Often times, if you go this route, you’ll end up with three or four dream homes, all of them reflecting exactly what you need at the moment. Keep in mind, that anything you do to improve the home, will come back to increase the value of your property, and help you build more equity for financial options later on.
Focus on Improvements
Increasing the value of your home is the best way to get the most bang for your buck long-term. It’s perfectly acceptable to change the house to fit your needs, but renovations should be completed with a direction of constant improvement. Installing a fireplace, a backyard pool, air conditioning, warming floors, all of it, are considered value increasing amenities. (Add in a garden and you’re suddenly attractive to a whole new type of home buyer.)
Most likely when you leave the home, you will also get the option to leave furniture there or take it with you. Should you leave the furniture there, it will add to the overall payment between you and the new owner, but it doesn’t actually add to the value of the home. This is why you can have a $5,000 TV in the main room, and it is not added into the home’s evaluation and value estimation.
Get Money for Improvements
There are an endless number of ways to make money these days. The problem is that there are less ways to make a large amount of money quickly. This is why there are numerous options for people to get access to money quickly, like home project loans. The property itself also can be looked at to generate more money for improvements. Many people have heard of the terms second mortgage and reverse mortgage, but they aren’t always used in normal conversations. They seem to have taken on a ‘buzzword’ feel over time. However, they are both very important to home renovations—particularly in the case of reverse mortgages.
Most homeowners strive to pay down their mortgages early. Reverse mortgages work by assessing your home’s equity and giving you a portion of that equity back in liquid money. Depending on the type of reverse mortgage you get, this money can be used for a single renovation, or anything that you could need. Essentially, you are accessing the equity in your home in order to renovate, or travel, or do a dream vacation. However, reverse mortgages do need to be paid back—but unlike other loans, reverse mortgages are not paid back until the primary mortgage owner sells the home, leaves it for over six months, or dies.
If your goal is home renovation, you should seriously consider getting a reverse mortgage once your equity is over 15%. According to Michael Branson, CEO of All Reverse Mortgage™ , “the more equity you have in your home, the more you could potentially take out later should the need or desire arise”.
Leave a Reply