Author: Dan Krell

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Renovation considerations

If you’re considering giving your home a makeover, you’re not alone. Desires to modernize and renew your home may increase as the years go by and trends and styles change.

There are plenty of options to make your home feel fresh as well as increase your enjoyment while in your home. Before you begin, there are two considerations that might cross your mind: “how much of a budget do I have?” and “what upgrades recoup the highest percentage of the cost if I decide to sell my home after I make the improvements?”

First, have you been saving for renovations? It is very important to create a renovation budget to fit your financial picture, and then stick to it. Even modest improvements can meet your needs, so don’t be tempted to go beyond your initial plan or over budget.

When renovating/upgrading your home, consider the long term resale value. Today’s designer trends could become tomorrow’s designer don’ts. Whether you’re planning a minor kitchen upgrade or planning a major addition, design experts have often recommended that home owners consider substance and function over style.

Before working on your home, Mark Anderson (2011, The designer discount. MoneySense, 13(1), 63) discusses the need to consult with a professional designer to assist you in your renovations. He suggests that many home owners who design their own spaces tend to focus on what’s trendy at the time without consideration of the fact that most trends are short lived. The longevity of the freshness of your upgrades can depend on your improvement choices.

The most sought after home improvements have typically been in the kitchen. The kitchen tends to be of major focus because it is a room that many people use as the hub of their lives. You might observe that trends are increasingly transforming the kitchen from a meal center to a lifestyle center by centralizing one’s daily activities around the room (as can be observed by adding shelves, built-ins, and computer desks as well as removing walls between the kitchen and other rooms). When updating the kitchen, experts warn not to go overboard as modest upgrades are often enough to increase your enjoyment.

When selling a home, curb appeal is always a consideration. So it’s no wonder that home owners typically go for the facelift equivalent by updating the exterior by replacing exterior doors, windows and siding. Not only can new exterior doors, replacement windows and siding give your home a fresh and modern look, these items could possibly add to your home’s overall insulation efficiency.

So, now that you’ve spent your money, you’re probably wondering “how much can I get back if I decide to sell my home?” Remodeling Magazine (remodeling.hw.net) publishes an annual “cost vs. value” report that provides regional estimates and averages of improvement costs and the estimated average amount that could be recouped if the home is sold at time of improvement. The magazine estimates that for our region, a minor kitchen upgrade could cost around $20,000 and might recoup about 74% of the cost at resale; while a major kitchen upgrade could cost about $55,000 and only recoup about 68.7% of the cost. Additional recoup estimates include: 102% for the cost of a front door; 72% for the cost of new siding; and about 71% for the average cost of replacement windows.

by Dan Krell
© 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

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Are the kids are all right; how kids cope with moving

Buying and selling a home is surely an exciting time, but it’s also a stressful time. Even the most organized person can feel the pressure. Of course, most people tend to redirect their energy into the practical aspects of buying, selling, and moving; such as ensuring their loan documents are in order, packing, and/or lining up a mover. If you have children, then additional things to worry about may be added to your already full plate of “to do” items, such as school matriculation and finding summer camps. But how are your kids coping with the move?

Like most things in life, moving to a new home is a process; the emotional process of moving involves various feelings that are expressed in no specific order and can sometimes be felt simultaneously. To complicate matters, your reasons for moving can also amplify this stress (divorce, job, etc.). Most children and their parents cope adequately during this time, but some may need additional attention and assistance.

Once you realize how hectic the pace can be while home searching/selling combined with moving, your attention to your kids may be slightly different. Although your children can experience the same feelings you may feel, their expression of those feelings can be vastly different. Some children may not be able to verbalize their feelings and their coping skills can vary.

Change can elicit both welcome and unwelcome feelings. The excitement and anticipation of a new neighborhood and school, and the sadness of leaving friends behind are just some of the feelings that children may experience while going through the process of moving to a new home. However, some kids may be more affected than others by the stress of the process and may seem more anxious, angry, and/or exhibit other behaviors.

Because children do not articulate their feelings like adults, some experts recommend that you “tune” into your children to determine how well they are coping. Of course, depending on your child’s age, indications that they may be having difficulty may vary: younger children may have increased incidents of bed wetting, incontinence and thumb sucking; while adolescents may become truant, defiant, and/or agitated.

Experts discuss the benefits of being open and honest with your children about moving, as well as informing them as soon as possible. Child experts have also recommended increasing your availability to your kids as well as acknowledging their feelings during the process. Younger children may need more comforting than usual, while older children may need to talk about the process.

Additionally, establishing continuity and allowing involvement in the process (when appropriate) can make the transition easier on children. Before the move, depending on the distance, you may be able to have your children visit the new school and possibly meet some of the kids in the new neighborhood. Have children help in packing and/or engage in other appropriate activities.

Many resources exist to assist you and your children cope with the process of moving to a new home, as this article is not intended to provide medical or psychological advice. Besides the many books written about the subject, school counselors, teachers, and pediatricians, are just a few professionals who may be able to assist you during this process. Of course, you should consult a medical, psychiatric, and/or a psychological professional if you have concerns about your child.

by Dan Krell © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

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Should we call it a colonial? Home styles can even confuse professionals

That brand new colonial you may be considering to purchase is not like your grandfather’s colonial. In fact it may not even be a colonial at all. It is not uncommon for architects and historians to disagree on the exact nomenclature for any particular home style. Most new homes built in the U.S. today incorporate a rich and diverse history of American home building. Home styles that originated from construction techniques brought from colonists’ home lands, continually transformed into more modern homes through the nineteenth and twentieth centuries.

Back to that new home you’re thinking of buying: although the style is based on the colonial home, the technical style name is the “neo-colonial” (or sometimes known as a “two-story modern”). Most new two to three story single family homes built today do not stick to the “pure” construction elements of the colonial, because they might be considered too bland for modern tastes. Rather, the neo-colonial incorporates many design features from other home styles and periods as well; as using modern construction materials and techniques that allows for dramatic exteriors and open interior floor plans.

Today’s neo-colonial style home can trace its roots all the way back to colonial times. Although the basic structure of the colonial was a two or three story home that was usually square or rectangle, the colonists often built homes with construction knowledge from their homeland with functionality to their surroundings. Immediately noticeable among early colonial style homes are the differences in roof pitch and gables, as well as the size and placement of the fireplace. Other differences can be described as ornamental, but may be due to construction techniques. Some early examples of the American colonial style include the New England colonial, German colonial, and the Dutch colonial. These early colonial styles later developed into the more opulent Georgian and the Federal styles that became popular in the early 1800’s.

The Cape Cod style home also originated during colonial times, and was often simple one or one and a half story homes that were built in the north east United States and Canada to be functional and affordable. The central chimney and steep angle pitched roof were common features of these homes that developed as a function of the climate. Later variations of the Cape Cod included dormers (which are the windows that protrude from the roof) as well as stylistic features from other architectural styles.

Some point to the Cape Cod as the inspiration of the modern bungalow, which gained popularity in the early twentieth century. Because some bungalow styles have dormers, they are often described as a Cape Cod (such as the Craftsman style or Chicago Bungalow).

Of course there are many other significant architectural styles that developed and gained popularity in the nineteenth and twentieth centuries. Architectural home styles were often influenced by art, history and geopolitics. Revival home styles often incorporated features from history or the recent past, while period styles were influenced by the essence of a specific time period (such as the Victorian style). However, some artistic styles (such as Prairie, Bauhaus, and Art Deco) seemed too esoteric for the average home buyer.

In the end, although you may not realize its pedigree, it does not matter what you style you label the house you purchase; what is important is that you call it “home.”

by Dan Krell © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

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Links between life events and foreclosure

Should mortgage lenders ask borrowers about their sex lives, health habits, or other behaviors? Sure it may sound outrageous and intrusive, but some might argue that certain life events exhibit specific behaviors that could influence your financial status. To the point: recent research has pointed to correlations between certain life events and foreclosure.

Don’t get me wrong, credit reports are a great tool for providing a snapshot of your current ability to manage your financial picture. An examination of your credit report can provide something akin to a “credit risk analysis;” which is often used to predict the borrower’s ability to repay.

Although a credit report and credit score can provide a snapshot of how a borrower looks at the time of a loan application, trouble may be brewing in the borrower’s life that has not yet affected their credit history. Neil & Neil (2010) indicate that financial issues and foreclosure are often due unexpected causes. They identified the following sources as being reasons for foreclosure: loss of employment; increased debt/financial obligations; job transfer; deteriorating health; and family discord (Neil, B. A., & Neil, J. J. (2010). Financial options for mortgagors in a declining economic market. Journal of Business & Economics Research, 8(3), 25.).

Employment issues and increased debt obligations are often thought of as being linked to foreclosure for obvious reasons. However, health care and family discord are often underestimated as links to financial difficulty and foreclosure.

Determining if there is a relationship between health status and foreclosure, Pollack & Lynch (2009) compared a sample of people undergoing foreclosure in the Philadelphia, PA area to a community sample in the same region. They found that 27.7% of the foreclosure sample “owed money to medical creditors;” 36.7% of that sample met the criteria for depression; while 9% indicated that medical problems (their own or a family member’s) was the primary reason for their foreclosure. Results of their study indicate that the foreclosure sample was more likely to not have insurance coverage or not have filled a prescription within a year of a foreclosure than the community sample. They concluded that foreclosure affects an already vulnerable population, and suggest that a combination of mortgage counseling and health screening efforts be undertaken (Pollack, C. E., & Lynch, J. (2009). Health status of people undergoing foreclosure in the Philadelphia region. American Journal of Public Health, 99(10), 1833.).

It has been stated that one of the top reasons for divorce is due to financial issues; so, like health concerns, family discord can also be concurrent with foreclosure. In a study of housing counseling effectiveness, Carswell (2009) states that divorce (like medical expenditures) can undermine home ownership and contribute to one’s financial behavior; and suggests housing counseling be sensitive to these issues (Carswell, A. T. (2009). Does housing counseling change consumer financial behaviors? Evidence from Philadelphia. Journal of Family and Economic Issues, 30(4), 339).

Like Pollack and Lynch’s study, which identified a correlation between foreclosure and health concerns, direct causality between certain life events and foreclosure have not been fully established. Although it may seem common sense to say there are links between these life events and foreclosure, one must be careful not to say that one causes the other; and therefore keep questions about one’s family life and health in the physician’s office instead of a mortgage application.

by Dan Krell
Copyright © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice.  Using this article without permission is a violation of copyright laws. 

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Proposed legislation may affect home owners and buyers

Now that the 112th Congress is in session, hundreds of bills have already been introduced. During the course of any Congressional session, hundreds (and sometimes thousands) of bills can be introduced; however, as you may already know, most bills don’t see the light of day as they are destined to die somewhere in the legislative process. Here are a select few bills that are currently making their way through Congress, which may be of interest to home owners and buyers,.

Not much has been said about the now defunct home buyer tax credit since it expired last year. Even though some were happy that it expired and pointed to data that indicated that the credit distorted home sales, along comes H.R. 330: “Homebuyer Tax Credit Renewal Act of 2011.” The bill, introduced January 19, 2011 by Rep. Bob Filner (D-CA), calls for a one year extension (from the date of enactment) of the home buyer tax credit [that expired last year]. So, if you kicked yourself for missing it, you may get another chance to take advantage of the home buyer tax credit.

If you’re unaware of the ongoing debate about the mortgage interest tax deduction (MID), your annual MID may become a thing of the past. As some real estate related issues continue to be a hot topic on the hill, this bipartisan House resolution was introduced to express the sentiment of not only numerous Representatives in the House, but also mimics the attitude of many housing industry groups and some constituents. Introduced by Rep. Gary Miller (R-CA) and cosponsored by 41 of his colleagues, H. Res. 25: “Expressing the sense of the Congress that the current Federal income tax deduction for interest paid on debt secured by a first or second home should not be further restricted;” not only expresses a need for the MID, but also enumerates the value and virtues of home ownership.

Home energy audits are an invaluable tool that provides information about a home’s energy efficiency. Obviously, home owners could use the information when upgrading or making improvements to their home. However, the controversy over who and when energy audits should be conducted continues to be sharply debated. Once part of last year’s legislation, H.R. 2454: “American Clean Energy and Security Act of 2009” (colloquially known as “cap and trade”); the requirement for home energy audits reappear in H.R. 627: “Home Energy Loss Prevention Act” (introduced February 10, 2011). If this bill is enacted into law, it will require a home seller to conduct a home energy audit and provide the data to a buyer, who is purchasing the home with a “federally related housing loan;” as well as creating and maintaining a database of the reports.

Additional legislation of interest includes: S. 22: “Homeowner Tax Fairness Act of 2011,” introduced by Sen. Kirsten Gillibrand (D-NY) would allow home owners who do not itemize to claim a standard deduction for real property tax; and H.R. 769: “Fair Access to Credit Scores Act of 2011,” introduced by Rep. Steve Cohen (D-TN) would require all free credit reports to also provide credit scores.

Legislation can be proper and necessary, while sometimes it can be “well intentioned” but with unintended consequences. Of course, the transformation and alteration of bills as they go through the legislative process; as well as voicing your opinion is all part of a bill’s life.

By Dan Krell
Copyright © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice.

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