There are a lot of folks who are happy 2010 is over and are looking forward to a better 2011.
For many homeowners who struggled to make mortgage payments and get bills paid, 2010 was a year of putting off big home purchases, like furniture and appliances, and big home-improvement projects, like recarpeting and repainting.
According to ServiceMagic’s Q3 Home Remodeling and Repair Index, Americans have switched their focus from adding on and doing major remodeling projects to completing “high cost” projects deemed “necessary.”
It’s no surprise that discretionary spending is down. Most households still haven’t seen their incomes rise, and millions of Americans are starting another year without a job. What most homeowners have been doing is saving as much money as they can to pay down debt, a process known in the commercial credit world as “deleveraging,” and a topic we’ve discussed elsewhere on the Equifax Personal Finance Blog.
But you can’t put off an important home repair forever, even if it is expensive.
According to Craig Smith, ServiceMagic CEO, “Homeowners have started investing in large-scale improvement and repair projects, like windows, roofing, heating and air-conditioning, and septic tanks and wells. Many homeowners told us that they have been putting these projects off for a year or more but could no longer wait to replace these major items. As homeowners decide to stay put, they are continuing to invest in their homes.”
The index, which looks at more than a million requests for home repair service, found that:
How can you afford a major repair?
But by putting yourself on a sounder financial footing, you may be able to spend a little more on your house next year, especially if not doing a particular home-improvement project could cause major damage to your home.
Here are a few things you might want to do before you sign a home-improvement contract with the first contractor who crosses your threshold:
One final piece of advice: If you’re starting a big home-improvement project, be sure to have someone with experience (like a real estate attorney) read over and approve your contract. And if the attorney recommends that you set up an escrow account and use that to pay the contractor, do it!
Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.
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How to Think about Debt When Buying a Home
Strategic Default: The Consequences of Not Paying Your Mortgage
4 Tips for Buying a HUD Home
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