Advice needed regarding mortgage, home improvements, etc.

14 years ago

Guess like so many folks who purchased a home 2yrs. ago, I feel a little sick to my stomach when I think of what I paid for it. The good thing is, I live in an area that is doing so much better than so much of the country as far as market values, but certainly, prices have gone down here as well. The military presence is our economic salvation here. Question...let's say I overpayed $25,000. for my house 2 yrs. ago. I put 50% down & have a 15 yr. mortgage at 5.625% interest. No one has a crystal ball to gauge what will happen in another 7-18 yrs. when we might sell, but in the mean time, what is my best course of action to protect my value? Should I attempt to pay off the mort. in 10 yrs, instead of 15? Should I instead spend that money on home improvements (today carpenter is doing a home maintenance project--repairing rotting wood around windows). Know that this house will need new windows in about 5 yrs., & new heating/cooling system at any time (system original to house--20yrs. old). Those are the two biggies that I know of. Would like to upgrade the kitchen applicances, counters, etc. Have spent a fair amount on having wallpaper removed, painting, light fixtures, small handyman things. Would you stop doing home improvements until it's closer to resale time? Any observations, suggestions, thoughts, would be appreciated.

Also posted this on the HF forum, but thought this would be a helpful site as well. Thanks!

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Comments (9)

qdognj
14 years ago
You only overpaid 25K? Not bad..lol...
In any event,forget about what the home improvements may or may not recoup sometime in the future..Make any improvements because they are something you want to do,without too much concern about their "preceived" future value..That said,i'd never wait until i was prepared to sell to make improvements,if you can afford the, and WANT to do them, go for it..
As for prepaying your mortgage,NO...You have a great rate, and after your tax rate is factored in,your "real" rate is likley 4-4.5%

Good luck
dave_donhoff
14 years ago
Hi SG,

Gotcha covered over here;
http://ths.gardenweb.com/forums/load/finance/msg081339492775.html?3

Dave Donhoff
Leverage Planner

[PS, tried to link below to the other boards... but the server's not happy about that, so cut & paste from above.]
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stinky-gardener
Original Author
14 years ago
qdognj , Thanks for the reply & the encouraging words...!
jakkom
14 years ago
You're in good financial shape. Don't worry about "overpaying" - it happened to us in 1989, and we survived just fine over the long haul. Painful for a while, but it worked out. And besides, we had to have a place to live, anyway. Might as well be twice the room of our old apartment and a free parking space in front as well, LOL.

Your best bet to maintain top value is to not over-improve your home, but keep it in absolutely top condition. This includes doing anything structural or system-related that is needed as time goes on.

We overimproved our house, but consider it worth it because we have enjoyed the benefits for the last 20 years. What actually makes the house saleable, however, are the structural improvements - a more modern open floor plan, upgraded kitchen and baths, the top-to-bottom electrical/plumbing/sewer upgrades (most homes here have a patchwork of old and new stuff done, not a complete system upgrade).

You do not have to do this - in fact, I'd recommend you don't! Home improvement on a full-scale is a seriously slippery slope. You'll love the end result, but you won't necessarily get back that much more money on resale than someone who just kept their home in good condition with modest upgrades. Only you can decide how much a big remodeling project is worth to you. Just don't count on more than 20-30% of the cost adding $$ to your home's value when you go to resell it 10 years from now.
stinky-gardener
Original Author
14 years ago
jkom51, Hi & thanks for your post. Your 1st paragraph sounds just like my DH! He doesn't have the anxiety that I have about this (or most things, lol!) It's helpful for me to hear from people who've had experience w/ these matters like yourself. It puts things in perspective. Thanks again!

Stinky
scdeb424
14 years ago
I used to worry endlessly about this subject as well. It took the shock of buying a new air conditioning unit to get me to understand that if you are taking care of the wear and tear on your house--that is not a home improvement. That is maintaining an asset that you have invested your hard earned money in. If you need new tires on your car you don't think that you are wasting your money so why would you be wasting your money if you have rotten windows repaired?
Don't add a new room to the house or do a complete kitchen redo but if the counter tops are cracked & stained, getting them replaced would be deemed a necessity as would having a working air condition in a southern state. You might not get your money back when you sell but you won't be losing more money when you sell a house that hasn't been kept in good repair. You could do the fix ups right before you sell but this is your home and life is short don't you deserve to have something nice without worrying about the resale value. Who knows, this might end up being the house you decide to stay in for a long time. I'd go room to room and make some hard decisions on what you can live with and what you can't--then set up a schedule for any improvements you "must" have after taking care of the repairs. You might be surprised at how short that "must have" list is.
stinky-gardener
Original Author
14 years ago
Hi scdeb424! Yes, I agree there is home "maintenance" & home "improvement." The wood replacement definitely falls into the former, while the counter replacement would be the latter as it is not in disrepair. Would like to eventually upgrade to Silestone. Also want to get all my appliances to match in color & when I do buy, want the quality to be if not top-notch, at least very good! You make good points about not worrying about resale value & the possibility of being in the house for the long haul (quite probable!) The good news is I believe I work pretty hard & consistently to maintain the house & don't really have outrageous or terribly lofty goals for "upgrades." Not shooting for an HGTV "dream kitchen" or anything like that. Hopefully, we as a nation are taking a few steps back from all that excess, & houses can start looking & feeling more like homes again! I mean do we REALLY need tv's in our bathrooms AND in our refrigerators to sell a house?! Thanks for your reply.
lucy
14 years ago
B-b-b-but if there's no TV in the fridge, what am I to do while waiting for "the" answer, and contemplating what to eat next? Sheesh!
stinky-gardener
Original Author
14 years ago
Lucy, I guess those of us in that unfortunate predicament will just have to "rough it" & consult a cook book for inspiration...sad, but true.

Advice needed regarding mortgage, home improvements, etc.

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