One of the most nerve-wracking aspects about remodeling to increase the value of your home is this:Should you spend all this money on home improvement or just sell your house as it is and start over? Before you embark on any extensive improvement project,it’s a good idea to determine whether remodeling is the best option for you,or whether it makes more sense to buy another house that will better fit your needs.

The following questionnaire will help steer you in the right direction.Answer each question and record the number of points associated with that answer.

1.How far “off” is your present house from the one you would like to live in?

A little (5)

Somewhat (3)

A lot (1) Score: ______

2.What are the property values doing in your neighborhood?

Increasing (5)

Staying the same (3)

Decreasing (1)Score: ______

3.What are property conditions doing in your neighborhood?

Getting better (5)

Staying the same (3)

Declining (1) Score: ______

4.How long will you get useful life out of any potential remodeling?

10+ Years (5)

3-10 Years (3)

Less than 3 Years (1)Score: ______

5.In relation to your house, the other homes in the neighborhood are:

Larger (5 )

Similar (3)

Smaller (1)Score: ______

TOTAL: ______

If you scored under 10 points,moving might be your best option because you know you’re not going to own your current home for long and you might live in a neighborhood where the property values are actually decreasing.

If your total is between 10 to 17 points,either option (moving or remodeling) might work for you.You need to take other factors such as your budget and your job stability into consideration. Any score of 18 or above indicates that remodeling might indeed be a good idea,especially if you are committed to your neighborhood and the property values where you live are stable or increasing. Even ifyouíve already decided that it makes sense for you to remodel, don’t call the lumberyard just yet.Next you have to look at whether you need to repair before you remodel.Even if you’ve decided to sell without remodeling,hold off a bit before you call a real estate agent.While repairs might not increase the value of your home,maintenance left undone can take dollars out of your pocket at resale.

If you are buying the home you currently live in, most likely you are paying a mortgage for the loan you took out when you bought the home. The type of loan that borrowers obtain when they are buying their primary home is called a mortgage. However, when borrowers wish to make a loan for a second home, a non-primary residence, the loan will probably be the form of an investment loan not a mortgage.

Owner occupied debt is the differentiating feature between a mortgage and an investment loan. Often investment debt allows minimal repayment amounts, for instance interest only payments. Owner occupied debt payments are made in an amount adequate to amortize the loan over a period of 30 years (generally). If you are considering purchasing property that you would consider investment property, it is very wise to discuss your plans with a financial planner or an accountant to assure that your intent will result in investment rather than personal use categorization of your financing.

Investments loans can be made for various reasons, not just as a loan to help a borrower buy an investment property. Investment loans may be obtained temporarily while the borrower is in the process of selling another property they own, commercial or industrial real estate loans and while the borrower’s investment property is being built (apartments, offices, hotels etc.). Borrowers who get a mortgage can get a construction loan but it only applies to the personal residence in which the borrower intends to live.

It may sound a bit confusing, but it really isn’t. Mortgages are for personal homes that the borrower will reside in; investment loans are for those who do not intend to reside at the premise that is the subject of the loan.

When considering an investment loan, there are many ways to go about finding financing. However, rather than spend a lot of time and energy pounding the pavement or thumbing through the phone book, why not go online and shop for your investment loan there? Online you will find a multitude of investment loan lenders and brokers eager to assist you in finding the perfect loan for your particular situation.

If you are fairly “financing savvy” you may already know exactly what type of investment loan you want, at what rate and for what term. You may even already know what rate of return to expect from your investment. If so, shop for the lenders that can lend you exactly what you need. The lending industry is quite competitive currently so be sure and shop around before settling on a lender to be sure you get the best possible deal.

If you are not well versed in investment type loans, it is highly recommended that you utilize the services of an investment loan broker. Your broker will not only search for the best loan for your needs but they will be a liaison between the borrower and lender to assure that the whole application process flows smoothly and quickly.

If you need extra cash to remodel your home or need extra cash to purchase a newer house, should you choose a home equity loan (HEL) or home equity line of credit HELOC)? Both of these types of loan or credit options are based on the equity you currently have in your house.

A traditional home equity loan is a second mortgage with a fixed term, fixed interest rate and fixed monthly payments. With a home equity loan, you will receive a lump sum of money at the time of closing. The loan has a very specific repayment plan and is not very flexible.

A home equity line of credit is like a credit card that you can use whenever you need it and can repay the entire amount or a portion of the amount borrowed or make minimum payments each monthly. You can also make interest only payments against the loan balance and you can also pay down your principal amount at any time and for any amount. A disadvantage to the home equity line of credit is that it comes with a variable interest rate, which means your minimum monthly payments can go higher.

If you want a set payment schedule and interest rate, then it is better for you to choose a home equity loan. If you have a short term need for money and want the security of being able to draw on a line of credit when you need to, then you will want to choose a home equity line of credit.

A home equity line of credit meets ongoing cash needs, such as medical bills or tuition payments. This type of credit line is excellent for people who do not have a level cash flow throughout the year such as a commission based sales person or a self-employed individual. A home equity loan is more suitable when you need money for a specific, one-time purpose, such as a major home remodeling project or purchasing a new car.

If you are looking for money for a home remodeling project, a home equity line of credit is going to be more flexible to suit your purposes. One advantage of a home equity line of credit is that you only make payments on the amounts that you have drawn against the line of credit. If you haven’t drawn against the line of credit, then you don’t have any payments but the line of credit remains in place in case you should need to use it.

A good rule of thumb is to avoid home equity loans if you have a short term need, as higher closing costs and prepayment penalties are using associated with these loans. Stay away from home equity lines of credit if you have a spending problem. Remember that the payments and interest rate on a home equity line of credit changes from month to month. If you are not disciplined in your spending habits, you can get into trouble.

Recently lenders have tightened their policies and restrictions on both home equity loans and home equity lines of credit. Many lenders have attached prepayment penalties, provisions to reimburse the lender for the closing costs paid by the lender, balloon payments and lock features on variable rate credit lines.

You also need to be aware that most lenders now require a credit score higher than 680 and a combined loan-to-value ratio of the first and second mortgages in the 80 to 90 percent range. Homeowners with a credit score higher than 720 will qualify for the best rates and will also be able to negotiate on some of the additional restrictions the lender is now placing on home equity loans and home equity lines of credit. The higher your credit score when you apply for one of these funding options the greater your negotiating power.