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Getting the Most Bang for Your Remodeling Buck

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Sometimes, your home is one of the largest investments in your ‘portfolio’. Whether you are looking to stay in your home for a while or are considering selling soon, it’s important to pay attention to which remodeling projects will help you add the most resale value to your home.

According to the Remodeling 2016 Cost vs. Value Report as compiled by www.costvsvalue.com for the Denver area, these are the midrange projects shown to be the best bets when remodeling.

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Avoid Being “House Rich, Cash Poor”

By | Investing, SH&J Blog, Tips | No Comments

Recently, a client was trying to understand how much home he could afford in the current Denver real estate market. Over the course of his home search, his maximum price point grew from $500,000 to $700,000 as he discovered how much it would take to purchase a home that fit within his criteria. The lender had approved him for the higher amount, so he assumed it was something he could comfortably afford. In addition, he had used several online “Home Affordability Calculators” that justified his inflated price point.

Thankfully he came to us before any of his offers were accepted. We calculated his new expected housing costs relative to his gross annual income, taxes, savings goals, and monthly obligations. In the end, he opted for the lower mortgage price point we proposed and was relieved that it would allow him to continue supporting his family and saving for long-term goals, many of which he would have had to forego had he chosen the higher priced home.

After our meeting, we reviewed several of the online “Home Affordability Calculators” by plugging in our own information and the results were breathtaking. The suggested home price points we received were also dramatically inflated.

Therefore, when you are shopping for your next home, we suggest taking a look at the difference between the approved home loan amount and the home loan amount that is appropriate for your own personal financial situation. Oftentimes, the two numbers are vastly different.

Why might this be the case? Although monthly obligations (debt, child support, etc.) and long-term savings are often considered in the mortgage lender’s calculation, the assumed savings (for retirement, education, etc.) are typically insufficient to reach your goals.

The term “house rich, cash poor” is a common term for being in the predicament where you’ve got lots of home, but not a lot of cash to meet your other needs. In order to avoid this destiny, we suggest working with a Certified Financial Planner™ to find the appropriate price point when purchasing a new home. If you are interested in a complimentary consultation or meeting with your current advisor, please do not hesitate to call us at 303-639-5100.

To Stay or to Go: Should You Downsize or Renovate as an Empty Nester?

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The last kid has left for college or to start their career. As the past few years have gone by perhaps you have wandered from room to room wondering why you are paying for all this space or wishing your space was better used. It could be time for you to consider downsizing or maybe your home is in need of a few simple renovations.

Before you make the decision to stay or go, here are a few things to consider:

Have they really flown the coop?

It is becoming more common for college graduates to move back in with their parents for a while as they find a job and establish a career. Do you want to stay in your home and wait to see if they need their space again? Before making the decision to move, think through the possible scenarios with your children to determine if it makes sense to hold onto the family home for a while longer.

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