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Purchasing, building or remodeling a home is an exciting time. The following articles provide information you can use to make informed decisions.

Financing Home Renovation with Home Equity Loans

4 Home Improvement Projects with High Long-Term Returns

When Should I Put My House on the Market

Should I Buy a Home During a Pandemic


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Financing Home Renovation with Home Equity Loans

(July 2020)
I’m doing some home renovations this year and I’m not sure how to finance this expense. There are so many options! Which one makes the most sense?

 As a member of Mid Minnesota Federal Credit Union, you have several options for funding a home renovation. You can open a HELOC, or a Home Equity Line of Credit, which is an open credit line that's secured by your home's value for up to 10 years. You can also fund your renovations with an unsecured loan or use your credit cards.

One of the best ways to fund a home renovation, though, is by taking out a Home Equity Loan. Let’s take a closer look at this popular loan option.

What is a home equity loan?

A home equity loan is a loan secured by a home’s value. When homeowners open a home equity loan, they will receive a fixed amount of cash in one lump sum. Most home equity loans have a fixed interest rate, a fixed term and a fixed monthly payment.

What are the advantages of a home equity loan?

The primary benefit a home equity loan has over other loans is its fixed interest rate. This means the loan will not be subject to increasing interest rates and borrowers know exactly how much their monthly payment will be for the entire life of the loan. Also, the interest paid on a home equity loan may be tax-deductible (consult your tax adviser for details).

Another benefit of the home equity loan is its repayment plan. Borrowers will be making payments toward the loan’s interest and principal throughout its life. At the end of the loan term, the entire amount will be paid up.

Are there any disadvantages to taking out a home equity loan?

While a home equity loan offers the funds needed to cover a home improvement project with an affordable repayment plan, it’s important to know about every aspect of a home equity loan before applying.

Taking out a home equity loan means paying several fees. It’s best to find out how much these fees will amount to before applying for the loan.

Also, when taking out a home equity loan, borrowers will receive their funds in one shot. This makes a home equity loan a great option for homeowners who know exactly what kind of work they will do on their homes. However, if they only have a vague idea about the renovations they want to do and how much they’ll cost, they may end up borrowing an insufficient amount.

Finally, borrowers will need to make a monthly payment on their loan throughout its life. Before taking out a home equity loan, be sure you can afford the payments.

To learn more about home equity loans call our expert staff at (218) 829-0371, or start your application online

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4 Home Improvement Projects with High Long-Term Returns

(June 2020)
When you’re making improvements to your home, you’re not just making your life better in the short term. You’re also making an investment in your future. Ideally, the increase in the value of your home will exceed the cost of the improvement.

However, it seldom works out like that. The most efficient home improvements don’t pay for themselves immediately. The first item on this list has an ROI (Return on Investment) of 98%. That means you get back 98% of the money you put into it. To look at it another way, you lose 2% of your initial investment.

It takes years for the appreciation in your home to recoup the expense of an improvement. When you’re making home improvements, though, you’re looking for ways to improve your quality of life while being as thrifty as possible.

Calculating ROI can be difficult because the data is based on national averages. For instance, in drought-afflicted parts of the country, water-efficient fixtures, rainwater collection facilities and low-water landscaping will pay long-term dividends. In places with lots of solar exposure and high utility costs, solar panels will make your home more cost-efficient and attractive to buyers. Keeping that in mind, finding out what works for your market therefore depends a lot on trends and local conditions.

There is some good news if you’re looking for more universal approaches for getting the best increase in value for your home improvement dollar. There are a few simple rules to follow. Seek relatively low-cost improvements that require little to no maintenance. They should immediately distinguish your house from similar homes and, ideally, they also improve the energy efficiency of your home.

Here are four home remodel projects that can improve the resale value of your home. It’s the perfect time to choose one, as many of us are staycationing for the summer. You can fund them with  a home equity line of credit (HELOC) and you may be able to save money by doing part or all of them yourself! By the way, consult your tax adviser to determine if these improvements apply for tax deductions.

Replace the front door

There’s an old adage in real estate that suggests the features get tours, but the front porch gets sales. People make decisions on home-buying all the time by starting with a gut reaction and finding reasons to support it later.

Why not start your home remodeling project with the first thing you interact with on your house: the front door. Upgrading an old, poorly-fitting front door with a newer energy-efficient model is a cheap, quick project that can instantly improve your home’s efficiency and aesthetic appeal. Best of all, hanging a door can be done in an afternoon!

With an average price of just over $1,200, including labor, an energy-efficient front door has an ROI of 98%! It’s also a chance to be creative. A new front door can add a splash of color, and window placements can break up a monotonous front profile.

Minor kitchen remodels

Replacing major appliances and installing new flooring is a difficult, time-consuming and expensive task. Being without a kitchen for weeks on end can be a nightmare, and the number of professionals needed to install new lighting and other features is mind-boggling. The national average for spending here is $57,000, and the ROI for major kitchen remodeling isn’t great, at only 68%.

Minor kitchen upgrades, like new cabinets, counter-tops and energy-efficient cook-tops, are comparatively inexpensive. The average spend here is just under $20,000 with an estimated return on investment at an impressive 80%. Just like with the front door, the changes are mostly aesthetic. People perceive a more modern-looking kitchen as being a better fit than a more “retro” look.

This is also a chance to customize a place where you spend a remarkable amount of time. Having a kitchen laid out just the way you like it can make it easier and more enjoyable to cook. This will encourage you to eat more meals in, and energy-efficient appliances can lower your electric bills for the life of the home.

Wooden decks 

Outdoor space is one of the hallmarks of the current iteration of the American dream. Where else can a family sit and enjoy a frosty lemonade on a hot summer day? Watch the kids play in the yard while tending the grill on a beautiful wooden deck!

The average cost, based upon a 16 foot by 20 foot wooden deck, is $12,000. The average return on investment is just over 80%. This is because of the perception of expanded living space at a reasonable price. Adding a deck costs about $40 per square foot, while a square foot of inside space costs an average of $90! Decks are a great way to increase the play space for a modest cost.


Convert an attic space into a bedroom

For most houses, the attic is an afterthought. It’s a place where unused craft projects and abandoned hobbies go to die. Consider turning that dead space into living space with a remodeling project!

Turning an existing attic space into a spare bedroom or office, complete with its own bathroom, can be done for a slightly steeper price. Nationally, the average cost is just over $50,000. That includes constructing a room, extending utilities to it and adjusting the exterior of the house to accommodate the new space.

This remodel provides a 77% return on investment in resale value, with the potential for more. If you have adult children or relatives visiting from out of town, an attic room can be a wonderful guest room. You could also rent it out for additional income!

If you need some funds to help with your home improvement projects, now is the time to try a Home Equity loan or a Property Improvement loan. Contact our expert staff for more information at (218) 829-0371. 

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When Should I Put My House on the Market

(May 2020)
During these unusual times many are spending more time at home. If you were planning on putting your home on the market soon, this could be a blessing.

The time spent at home allows us to not only do normal yearly spring cleaning; it also allows us to work on those projects indoors that help to spruce up our homes for when the market is back up and running. Take the time now to do indoor repairs, paint, clean out closets and garages.

While the temperature is still cooler, finish up those indoor home improvement projects. Once the temperatures warm up, move to your outdoor projects. Before you know it, the time will come to put your home on the market, and you’ll be ready.

Spring has traditionally held the designation as the best time of year to see a home. Not only does spring bring hope for something new, but if you spend your time indoors now decluttering and fixing those repairs you’ve put off, your house will be ready to sell when things are back to normal.

What makes spring so well-suited for house-hunting? Let’s take a deeper look at the sell-in-the-spring rule so you can make an informed decision about when to put your home on the market.

Why spring?

The beautiful, mild weather of spring showcases your property in all its glory. Pleasant weather also makes it easier for you to tend to do repairs and upgrades on your property.

Aside from delightful weather, springtime brings the end of the school year. House-hunting in the spring often makes the most sense for families with school-age children. This way, they can be settled into their new homes and schools before the new school year.

Finally, spring means more daytime hours to show your home to potential buyers.

Do homes listed in the spring really sell quicker and at higher prices?

An ATTOM Data Solutions analysis of 14.7 million home sales showed that houses sold in May closed at 5.9% above their estimated market value when compared to other months.  Another study by proved that homes listed during the spring are 1% less likely to sell with a price cut than homes listed during the rest of the year.

Also, a Zillow study showed that homes sold during the first two weeks of May tend to be on the market less time than homes sold any other time of year.

Does this rule hold true for everyone?

“Springtime to market” might be a good rule of thumb for most home sellers to follow, but it does not apply in every case.

Here are some factors to consider when deciding when to list your home:

The local market. If your neighborhood is full of for-sale signs and your home does not have any distinguishing features, consider waiting until the market cools off to give your home a fair shot.

On the flip side, if your home has one or more features that set it apart, you’ll want to list it when the neighborhood is full of house hunters for optimal exposure.

Your preferred time to move. Pick an ideal moving date and work backward to decide when to list your house. You can estimate 50 days to close after going under contract, and then add up to a month for preparing your home for market, choosing a selling agent, making any necessary repairs or upgrades and finding a buyer.

As we know, right now realtors may not be conducting open houses at this time, but you are able to interview and research your area realtors to find the best fit. You can also start the application process to be ready to purchase your new dream home! A majority of paperwork and applications can be started online or virtually if you are ready to put your house on the market. 

It is understandable that during this time, your plans may have been changed, but with all the time we are spending at our homes, now is the time to get to those projects we’ve put off.

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