Our friends at This Old House wrote up a detailed primer on renovation loans and we thought we would share it. There are many ways to go about securing financing for a renovation. You’ll also find some links on our website of local banks and contacts we have used and recommend. The best time to start thinking about financing is right now.

Until recently, borrowing money for a new kitchen, second-story addition, or other home improvement meant going to the bank, seeing a loan officer, and hoping for the best. Today, however, you have many more options. A mortgage broker, for example, can offer more than 200 different loan programs. And brokers are just one of the many lenders eager to put together a loan that fits your situation — even if your credit history is less than perfect.

That means you might be able to borrow more money than you think. But with so many competing lenders, loan options, and terms, it also means loan shopping can be as challenging as house hunting. You can skip all the confusion and land on the right lending program by:

1. knowing how much money you need and roughly how much you can get from the start
2. narrowing the myriad loan options down to the ones that match your needs and finances
3. concentrating on the lenders that are likeliest to provide the type of loan you want.

How Much Can You Borrow?

Whether you hire a contractor or take on the work yourself, begin with an accurate estimate of what the project will cost. Lenders will insist on a specific figure before they work with you. If you’re hiring a contractor, start with a firm bid, broken down into labor and materials. Then add on 10 percent for surprises. On work you’ll do yourself, compile a detailed materials list with quantities, costs, and an accurate total. Include permit fees and equipment rental. Then add a cushion of 20 to 30 percent to be safe. Once you know how much you need, how much will you get? Despite the promises and hype lenders make in their ads and promotional materials, how much you can borrow hinges on your credit rating, the loan-to-value ratio, and your income. These factors also help determine the interest rate, the length of the loan, and whether you’ll pay points. Your credit rating. The best rates and terms go to homeowners with an A rating — no late payments in the last 12 months and no maxed-out credit cards. One or two late payments or overdrawn credit cards probably won’t knock you out of the game, but you might end up with a higher interest rate and a smaller loan.
Loan-to-value ratio. To determine the loan amount, lenders use the loan-to-value ratio (LTV), which is a percentage of the appraisal value of your home. The usual limit is 80 percent — or $100,000 for a $125,000 home (.805125,000). Lenders subtract the mortgage balance from that amount to arrive at the maximum you can borrow. Assuming your balance is $60,000, the largest loan that you can obtain is $40,000 ($100,000-$60,000=$40,000). If you have a good credit rating, a lender might base your loan on more than 80 percent of the LTV; if you don’t, you might get only 65 to 70 percent. While many lenders go to 100 percent of the LTV, interest rates and fees soar at these higher ratios.

Your income. If you also have high expenses, a high income level might not mean a larger loan. Lenders follow two rules to minimize their risk:

•Your house payment and other debt should be below 36 percent of your gross monthly income.

• Your house payment alone (including principal, interest, taxes, and insurance) should be no more than 28 percent of your gross monthly income. The maximum debt-to-income ratio rises to 42 percent on second mortgages. Some lenders go even higher, though fees and rates get expensive — as will your monthly payment. However, a debt-to-income ratio of 38 percent probably is the highest you should consider carrying.

The LTV determines how much you can borrow, and your debt-to-income ratio establishes the monthly payment for which you qualify. Within these two limits, the biggest trade-offs are interest rates, loan term, and points.

Interest rates. The less interest you pay, the more loan you can afford. An adjustable-rate mortgage (ARM) is one way to lower that rate, at least temporarily. Because lenders aren’t locked into a fixed rate for 30 years, ARMs start off with much lower rates. But the rates can change every 6, 12, or 24 months thereafter. Most have yearly caps on increases and a ceiling on how high the rate climbs. But if rates climb quickly, so will your payments.

Loan term. The longer the loan, the lower the monthly payment. But total interest is much higher. That’s why you’ll pay far less for a 15-year loan than for a 30-year loan — if you can afford the higher monthly payments.

Points. Each point is an up-front cost equal to 1 percent of the loan. Points are interest paid in advance, and they can lower monthly payments. But if your credit is less than perfect, you’ll probably have to pay Loan shopping often starts with mainstream mortgages from banks, credit unions, and brokers. Like all mortgages, they use your home as collateral and the interest on them is deductible. Unlike some, however, these loans are insured by the Federal Housing Administration (FHA) or Veterans Administration (VA), or bought from your lender by Fannie Mae and Freddie Mac, two corporations set up by Congress for that purpose. Referred to as A loans from A lenders, they have the lowest interest. The catch: You need A credit to get them. Because you probably have a mortgage on your home, any home improvement mortgage really is a second mortgage. That might sound ominous, but a second mortgage probably costs less than refinancing if the rate on your existing one is low. Find out by averaging the rates for the first and second mortgages. If the result is lower than current rates, a second mortgage is cheaper. When should you refinance? If your home has appreciated considerably and you can refinance with a lower-interest, 15-year loan. Or, if the rate available on a refinance is less than the average of your first mortgage and a second one. If you’re not refinancing, consider these loan types: Home-equity loans. These mortgages offer the tax benefits of conventional mortgages without the closing costs. You get the entire loan up front and pay it off over 15 to 30 years. And because the interest usually is fixed, monthly payments are easy to budget. The drawback: Rates tend to be slightly higher than those for conventional mortgages. Home-equity lines of credit. These mortgages work kind of like credit cards: Lenders give you a ceiling to which you can borrow; then they charge interest on only the amount used. You can draw funds when you need them — a plus if your project spans many months. Some programs have a minimum withdrawal, while others have checkbook or credit-card access with no minimum. There are no closing costs. Interest rates are adjustable, with most tied to the prime rate. Most programs require repayment after 8 to 10 years. Banks, credit unions, brokerage houses, and finance companies all market these loans aggressively. Credit lines, fees, and interest rates vary widely, so shop carefully. Watch out for lenders that suck you in with a low initial rate, then jack it up. Find out how high the rate rises and how it’s figured. And be sure to compare the total annual percentage rate (APR) and the closing costs separately. This differs from other mortgages, where costs, such as appraisal, origination, and title fees, are figured into a bottom-line APR for comparisons simply to get the loan.
Which Lender for What?

For a home equity line of credit, the best place to start is your own bank or credit union. Both usually offer lower rates to depositors. Check other sources to be sure. If you get a second mortgage, refinance, or opt for an FHA 203(k) mortgage, you’re better off talking with a mortgage broker. A broker has more loan sources to choose from. When looking for a broker, check with people you know, and check any references you get. Contractors are another source of financing, but be wary: It’s hard enough to choose a contractor and a loan when they’re separate. And be suspicious of contractors who emphasize the monthly payment instead of the total cost of the job. A borrower’s bill of rights. Article Z of the federal Truth in Lending Act makes sizing up lenders and loans easier. It requires lenders to disclose interest rate, terms, costs, and variable-rate features in a total APR, a bottom line you can use to compare loans. Here are some other rights to remember:

• If a mortgage lender does not disclose the APR, any application fees must be refunded. You usually get these disclosures on a form with your loan application. If any terms change before closing, the lender must return all fees if the changes make you decide not to proceed.

• You have three days from the day of closing to cancel. Inform the lender in writing within that period and fees are refunded.

Fall is in the air. Even though the drop in temperature is slight here in Atlanta, it’s enough to get folks thinking about colder months ahead and toasty fires. Here are a few things to keep in mind if you are thinking about getting your fireplace ready for the season.

According to the U.S. Consumer Product Safety Commission, fireplaces and chimneys cause more than 25,000 house fires every year, resulting in at least 10 deaths annually. Some of the dangers of fireplace operation include the following: Sparks popping into the room and setting fire to rugs or furniture Combustible materials placed too close to the fire Chimney fires Carbon monoxide seeping into the house Harmful particles in smoke Careful operation and routine maintenance can minimize these dangers and allow you to use your fireplace in safer conditions. For example, an annual inspection is a must. As a homeowner, you can perform a basic inspection yourself. Is the chimney in good shape? Are there obvious leaks or stains? Does the flue have a cap? Does the damper seal off the flue completely? A professional chimney sweep will complete an internal inspection of the fireplace and flue and look for any internal or structural problems. He will also remove creosote buildup before it becomes dangerous. Creosote is the residue that results from fires and sometimes condenses on the inside of the flue. When it builds up, it can catch fire, resulting in chimney damage and potential spread of fire to the house. Keep in mind, though, that an open fireplace will usually result in some smoke entering the room. The particles in this smoke could aggravate the problems of those who already have respiratory conditions such as chronic bronchitis or asthma. Breathing particles over the long term can contribute to lung disease. Older adults and children are especially vulnerable. In order to lower the risk when using your fireplace, you should: Keep all combustibles a safe distance away from the hearth. Use a fire screen to prevent sparks. Install a spark arrester at the top of the flue to guard against roof fires. Keep a fire extinguisher handy. Install smoke detectors on every level of your home. You should also have a carbon monoxide detector.

Operating a traditional wood-burning fireplace is not difficult if you follow a few simple guidelines. First, you should begin by choosing the right fuel. Be sure to burn hard woods, such as hickory, ash, oak and hard maple. Soft woods such as pine and spruce generally don’t burn as well or provide as much heat. Also, be sure your wood is seasoned, or dry. Wood needs at least six months — many experts suggest at least a year — of drying to reach the 20 percent moisture level that is recommended for a good fire. One way to be sure your wood is seasoned is to knock two logs together and listen for a hollow sound, not a dull thud. Seasoned wood is also darker and has cracks in the end grain. Avoid using wet or rotten wood, and never burn trash or cardboard in your fireplace. Pressure-treated wood and chipboard are also inappropriate. To start the fire, you need kindling — smaller pieces of wood that will take flame easily. Stack a few split logs on your grate and place kindling around and below them. Make sure the damper is open before you light the kindling with newspaper. Don’t use too much paper, as flaming scraps can be carried up the flue and onto your roof. Never use gasoline, lighter fluid or a butane torch to start a fire. Once the fire is burning, you may still encounter problems with puffs of smoke entering the room. One cause of a smoking chimney is a house that’s too tight. If there aren’t enough openings to make up for the air drawn up the chimney, it can cause negative pressure in the room, creating a partial vacuum. Air pressure forces air down the chimney to compensate, resulting in a smoky house. The solution is to crack a window near the fireplace to let air in.

If you’re looking for a fireplace that gives you both efficiency and the pleasure of watching the flames dance, you might consider a gas model. You can’t roast marshmallows in them, but you’ll have the advantage of a clean and convenient source of heat. A modern gas fireplace emits no smoke and vents its waste gases to the outside through a tube in the wall rather than up a chimney. It incorporates air-movement channels that maximize the warmth supplied to the house. The fireplace consists of incombustible “logs” covering gas vents, and the fire itself burns behind glass doors. It gives off both radiant and convected heat and provides an experience similar to an open fire. One benefit of a gas fireplace is that it may help lower heating bills. It lets you heat the room you are spending time in while you keep your thermostat low and the rest of the house cooler. You stay toasty and your furnace gets a rest. Most gas fireplaces take advantage of sealed combustion. Their doors have gaskets that block all air. The fire draws air outside air through a pipe to support combustion, so no warm room air is drawn out of the house. If you want to add a fireplace to an existing home, a gas fireplace makes sense. Because it doesn’t require a massive masonry hearth and chimney, it can easily be included in a new family room. You sacrifice much less floor space and still have a fire to look at. You can also buy a gas fireplace insert that fits into a traditional fireplace hearth and boost its energy efficiency. As with its wood-burning counterpart, the gas insert has its own flue that snakes up the masonry chimney. Because gas burns very cleanly, there are even vent-free fireplaces on the market. In this case, the combustion products — carbon dioxide and water vapor — simply enter the room, along with all the heat produced. Although highly efficient, they are also subject to debate. In a tight home, a vent-free fireplace can deplete oxygen or create an excess of moisture. The American Lung Association warns buyers to be careful of the emissions given off by vent-free appliances [source: American Lung Association]. Gas fireplaces are easy to use and require little maintenance. Some come with a remote control, so that you can adjust them from across the room. You will occasionally have to remove dust, soot and carbon buildup from the logs and make sure the door gaskets are intact. As with any gas appliance, if you smell gas, turn off the supply and call an expert.

When you first move into your new or renovated home, you wonder how you are going to fill up the large, empty space. Pretty soon life takes over — and before you know it, you are wondering where all of that space went.

If you find yourself struggling to find room to store everything you’ve accumulated over the years, see if these storage options might work for you.

Before you invest a lot of time deciding where things should go, look through your closet, files and drawers to determine what can be thrown or given away. For clothes, it is a good rule of thumb to get rid of items that you have not worn in more than 12 months.

A lot of your household financial documents and papers may be available online through the provider company’s website. If that is the case, discard old financial statements or bills that you can more easily access electronically. Invest in a paper shredder for these documents to protect your identity and accounts.

It is very easy to allow cabinets and drawers to become cluttered over time, especially when you have to do a quick cleaning of your home when you have surprise visitors. Declutter those drawers periodically to keep from accumulating outdated flyers, menus, magazines and newspapers. This will open them up so you can store more day-to-day items that you need to quickly reach.

If you are looking to replace old, worn-out furniture in your home, buy pieces that also can serve as storage. Consider a coffee table that has drawers or an ottoman that can open up and double as a spot to store your blankets.

In closets and in the kitchen,use all of the space that is available to you. Often home owners are giving up valuable square footage if they don’t install cabinets or shelves that go up to the ceiling. Store items that are either out of season or that are rarely accessed — such as holiday decorations — on the higher shelves where they are out of the way. This will free up the lower shelves to allow you to get to the things that you use on a regular basis.

Bed risers can be found in home design and improvement stores in different shapes, styles, textures and colors to complement your current bedroom furniture. They are inexpensive and not only give you added storage space, but will also give your bedroom a new look. By simply raising the height of your bed a few more inches, you can gain a lot more storage space that is also hidden away.

A few years ago, one of the more decedent things a client could request would be a heated flooring system. Today the technology of heated floors has improved and the installation is more streamlined and much more affordable. What once seemed like an over the top luxury can now be enjoyed as a welcome feature to many renovations.
The principal is simple: The floor radiates heat to your feet, warming you all over. Most familiar are hydronic systems that heat your entire house. They produce wonderful heat, but they require serpentine runs of plastic tubing, water heaters or boilers, pumps and manifolds. This makes hydronic systems expensive and complicated to install. A simpler, less expensive alternative for just a single room is one of the electric systems discussed here.
An electric radiant system consists of thin heating cables, like the wires in an electric blanket, installed under ceramic tile. Because the cables are so thin they don’t raise the level of the flooring much; this makes them great for remodeling. They’re installed where warm floors are appreciated: bathrooms, mudrooms, and kitchens. Controlled by their own thermostat, these systems don’t replace your main heating unit — they augment it. To install an electric radiant floor in an existing room, you’ll need a dedicated 15- to 20-amp GFCI-protected circuit to power the system, and an excuse to lay a new tile floor. If you’re remodeling, it’s a good time to satisfy both requirements. This system will consume about the same amount of electricity as three 100W lightbulbs.
One of the systems we like to use is made by Shluter. Their Ditra-Heat membrane is available in both mat and roll formats and is designed to secure the system heating cables and serves as a universal substrate for tile coverings. This application provides uncoupling to neutralize the differential movement stresses between the substrate and the tile covering to prevent cracked grout and tile, waterproofing to protect moisture-sensitive substrates, vapor management, and support. The twisted pair heating cable is available in 120 and 240 Volt formats. The cables can be installed without returning to the thermostat and produce virtually no electromagnetic fields. The digital thermostat controls the floor temperature and is offered in both a programmable and non-programmable format. The thermostats feature a built-in Ground Fault Circuit Interrupter (GFCI), digital display with backlit screen, and support both the 120 and 240 Volt cables. The programmable thermostat also includes 250 preset programs.

Your winter could be a lot warmer with a little floor heat!

Many of us have a dream house we have always envisioned. Maybe we look around our current home and wonder if there is more potential in its walls to unlock; bath renovation, and extra bedroom, a larger family space? Remodeling a home you currently own in a neighborhood you love is always a good consideration. If you find your “renovation list” becomes heavier than your “don’t touch” list you may want to consider a new custom home. There are several factors to put on the table and discuss.

How do you feel about the neighborhood you are in now? What are home values like? In so many of our in-town neighborhoods, the value of an older home is in the land and the location. If your neighbors have spent significant amounts on renovation, if home prices for renovated or newer homes on your street far exceed the value of your home, if you purchased an older home and have paid down a large portion of your mortgage, you might start thinking about tearing your home down and starting over. This time with your dream home in mind. This can feel like a drastic solution but often renovation costs on an older home with less than ideal foundations and infrastructure can start to exceed the cost to start from scratch.

After doing the math, we often find that starting from scratch for a custom home will add $150,000, give or take, to the equation.  A fully renovated older home may be around  $150,000 less than that new custom home. Then it is up to you whether the additional debt burden is worth the investment.

Maybe you have a neighborhood in mind, next to a great school, walking distance to parks and restaurants. Again the key is to closely evaluate neighborhood home values. Often small, original homes can be picked up at a price that equals the cost of the lot. Occasionally, lots are also available in sought after neighborhoods. This can be a bit of a quest to find the right spot, but with the valuable opinion of a builder and a real estate agent, you can find something.

Another great spot to start is to create a file of images of homes you love and features you feel are important in the interior. What is the style of architecture that interests you? Do you want a new home in keeping with original architecture of the area or are you drawn to clean, contemporary line? The more homework you can do to provide your architect and builder with a clear vision of your dream home, the more successful your project will be.

You know the house in your neighborhood, the one with the perfect entry, warm lighting, tidy landscaping. It has that certain something known as curb appeal. Here is our secret recipe for becoming the best looking face on the block.

The front door is a great starting point and can provide a huge change with minimal disruption. If you have the time and budget, a new front door with welcoming glass and substantial hardware can’t be beat. Need to work with what you have? Paint cures all and if your existing door is plain Jane, try a bold color. Black and red are classics but how about pumpkin, canary yellow, minty green, Tiffany box blue?  Hardware can provide the jewelry for your mini makeover and door numbers, mail slots, and door knockers can add to the accessories. Think about your nearby lighting. Are these fixtures you would like to keep? Do you want the door hardware to match? There’s no rule that says it needs to. Oil rubbed bronze or black light fixtures look beautiful with an aged brass door knob.

Exterior features like window boxes and shutters can add character and charm to your exterior elevation.  Details like these don’t need to be traditional in style. A modern cement planter with sculptural plantings can soften a home’s contemporary edges.

Lighting can be an often overlooked feature when renovating. Running electrical outside for a sconce or landscape light is an easy add on when the electricians are working elsewhere in your home. Don’t let the opportunity get away to subtly light a beautiful maple or cast a warm glow over an entrance.

Stone or slate steps, a shelter or covering over a door, a small patio area or porch are all features that can be added without huge expense. Green grass and well maintained plantings of course contribute to your home’s appeal.

Fall is on its way and cooler weather isn’t far behind welcoming in the holiday season. Families gather for seasonal celebrations and a fireplace tends to draw some main attential. Of course that is only if you can pull people off the kitchen island!

The hearth has long been the center of the home and from a design perspective there are many ways to treat this feature. The classic wooden fireplace surround and mantle is just that- a classic. Stained wood will long be the default for a classic fireside.

In an effort to freshen up those traditional elements, people have painted the fireplace mantle and creating a streamlined look with their window, door casing and crown molding is a clean, bright look. Paint doesn’t have to be limited to the universal white however. Nothing created a moody and cozy room like a rich, high gloss paint color in a dramatic color.

Limestone surrounds have been popular in both a sculptural and contemporary style or detailed classical flare. Old world charm abounds from these timeless features.

Then there are always homes that learn toward minimalism and a fireplace mantle and surround can be designed to accommodate these spaces as well.

Our designers are available to walk you through some style options for your home and get you ready for the cooler, holiday season and all the entertaining that it brings.

At Home ReBuilders, we have been asked to design all sorts of projects over the years. We have built glamorous doghouses, outdoor rooms, and a two story addition for an enormous pipe organ. People invest in their homes and many are committed to making their space a complete expression of their tastes and needs.

Lately we’ve been sensing a new trend and theme for a few renovations. We are currently designing a few projects for clients that have growing children. These teenagers are looking for a spot to do homework, set up a project, work on a computer generated school assignment. Gaming units are still a space consumer and the video game/movie watching zones are a priority. Can we design a spot for long legged teens to gather after a lacrosse game, grab a soda and digest the videos taken during the game? Absolutely! We’ve started identifying these zones as the teen lounge. 

These spots take shape often on a second floor, maybe between a few bedrooms. Maybe the extension of the “jack and jill bath” becomes the “john and jane zone”. Some things to think about may be built in cabinetry or the addition of closets for storing audio visual equipment, ample outlets at desk height, lighting for work tasks, undercounter refrigeration unit, and room for comfortable furniture.

As advocates for our clients, we love to design very specific spaces but we also recommend thinking about your home resale and how your renovation fits into this equation. Can this teen lounge became a craft room for mom when the children leave the nest? Would this translate as a home office or hobby room for another buyer? Maybe this space can transition to a guest suite for out of town family.

One of the best things we get to do at Home ReBuilders is help people shape their homes to fit their live. Give us a call to discuss your needs.

At Home ReBuilders, we take pride in our architectural staff and team of designers. Kathy Bodnar has recently joined us and we’ve be thrilled to introduce her level of skill, attention to detail and focus to our department. Here’s a quick Q & A session with Kathy.

What led you to your interest in residential construction?

Growing up and going to school in Chicago had helped develop my passion for residential architecture. There was so much inspirations everywhere. I was naturally drawn to architecture in general at an early age, with family in the construction industry to spark my interest.  I have practiced both commercially and in the residential realm of architecture but I find that there is something special about creating a home or developing it further.   Homes are something more, they have soul, they give shelter, and they are places where memories are created.  The smallest of corners in a home can be the most special place.  A home will speak to your soul if you are willing to listen.

If you could name your favorite style of architecture or describe your dream home, what would it look like?

I’m a Richardsonian Modern Victorian Classical Industrial Craftsman type of architect.  There are so many wonderful parts to so many styles. Who can truly pick just one? I love a blend.   I think each building, its owner and its site will dictate its definition, its style, its language, its soul.

Can you think of a favorite project you’ve done with Home ReBuilders?  What did you like the best?

I’m too new to have favorite yet. Loving everything I’ve worked on so far.

Favorite autumn or after work activity?

I’m a sketcher, I love to draw. So anywhere I can go for inspiration is where I want to be.  I love biking and hiking.  I love experiencing the world around me, taking photos storing it all for future sketches, paintings, watercolors or residential design inspiration.