Mortgage rule changes: an opportunity for home owners and renovators

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Are you one of the many homeowners who did not take advantage of the Federal government home renovation tax credit that expired Feb 1, 2010?

This stimulus program allowed certain home improvements valued from $1,000 to $10,000 to have a tax credit.  For the renovation industry, there was a surge of business during this period.   It also caused an artificial boost of activity, which lead to lower business volume following the expiry of the tax credit.

The recent default insurance rule change, taking effect March 18, 2011, regarding the maximum equity that can be financed out of a home may at first glance appear to be another crushing blow for the renovation industry....and you.  Last year, the government reduced the amount available for home refinancing down to 90%.   Now, it will be down to 85%.

If your mortgage is near or over that 85% of home value, does this mean your are stuck in a home environment that no longer appeals to you? 

Let me guess: you have looked at other homes for sale and they are being sold by folks in a similar situation as you.  They are trying to sell a home that is, shall we politely say, "cosmetically challenged"?

Here's your opportunity to have the home environment you want, without resorting to credit cards to pay for renovations.  Yes, many big box home improvement stores have "interest free" cards for big project....but, there is always that day of reckoning.  The interest free period expires, and the bill gets expensive.

Look around your home and decide what you like about it.  Look around and list what you don't like about it.  Detail what would make it a perfect home for you.  Check out those home improvement stores for the types of flooring, carpet, fixtures, paint or other changes you want to see in your home.

Now, talk to a realtor about what you can reasonably expect to have as a net sale value of your home. If your net sale value after paying your existing home financing off from sale proceeds is over 5% of the total value of a different home purchase price combined with the labour and material costs of what your next "Perfect Home" will be....we have a winner!

What the government takes away, there remains an opportunity to have a fresh home of the style you want.  It takes collaboration with a realtor and renovator...and if you have questions on how to-    Ask Phil, of course!