Creating a Home Office

These days, millions of people work from home thanks to innovative technology. In fact, over 20 million Americans telecommute for work at least part-time. This number is only expected to grow as technology advances. While there are pros and cons to everything, working from home presents more advantages than disadvantages. That explains why so many employees prefer telecommuting over hopping in their car and driving to an office.

Many residential architects are building home offices in new homes and in remodeling projects. A home office is a great way to add value to your home as well as functionality. If you’re thinking of creating your own home office, here are some things that you should consider:

One of the most difficult decisions is where to put the home office. Finding the right spot for your office can be a challenge. Some homeowners like to put their home office in the kitchen—the center hub of the house. Others prefer to create an office in a spare bedroom or the basement. If you choose the basement as the location, you need to make sure the space is absolutely dry. Also consider a private entrance for your home office for extra privacy.

Make technology available in the office. The whole point of working from home instead of the office is to be able to replicate what is available at the headquarters. This means that you need the correct wiring for voice communication, wireless setup, etc. Most homes that were built in the last few years have advanced wiring known as Category 5.

Make use of all available space. There will probably be plenty of wall space in your home office, and don’t be intimidated to use it. You can have bookcases and shelves from the floor to the ceiling if you choose. Don’t worry so much about aesthetics if you need lots and lots of storage space.

Be sure the electrical system is up to par. If you live in an older home with older wiring, there is the potential for power surges that can result in fires. If you need to upgrade the wiring, don’t put it off. Hire an electrician to make certain the system can handle the demands of your home office.

Paint the walls a motivating color. For some, yellow or red gets them motivated to work. Others perform better surrounded by calm blue walls. Choose a color that you love and that will motivate you. And don’t worry about what others think—it’s YOUR home office!

Refinance and Remodel Your Home

Stuck between the options to go for a refinance or to hold back until home improvements are done? You might possibly be considering a construction loan as well to complete your addition, and then later refinance your mortgage. But there once again, you may feel stuck; should the value of your new addition exceed your appraised value? So, the bottom line is to go for improvement or refinancing? How about if we tell you that you could go for both!

Earlier, there were two distinct ways which people would opt for when they wanted to utilize the equity of their houses for house improvements. Based on their current appraised value, they’d obtain an equity loan. Or put some construction plans and specifications together, include some contractor’s bid and acquire a construction loan.

If you look at it, both the ways fall under second mortgage loans.

The amount for equity loans are based upon the ongoing market value of the home, and the construction loans are mostly set according to the “as finished” value of the home. In simpler terms, that’s the value of the home after the improvement work is done. We all know that while doing a major remodeling of a house, often the construction costs surpass the property’s current value. And when that happens, due to the absence of any equity in the home, lenders are not the party to offer their best programs.

Rates on second mortgages are often higher than the rates on a first mortgage. Also, in the instance of a line of credit or an equity loan, the interest rate is never stable. Initially, it’s lower but later it starts climbing higher. Problematic!

Then, if you were to acquire a construction loan or equity loan, the rates would be mostly higher than your current first mortgage finance. And if the construction phase goes on for two to three months, you can’t count on the interest rate to stay where it was earlier.

Problems, problems, problems… But not anymore.

There are lenders who offer a mortgage finance, which takes care of both the issues. You can now not only refinance a current first mortgage into a lower rate, but also simultaneously borrow more for home improvement. All at today’s lower rates, avoiding higher rates and variable construction loan terms. Fascinating!  

So, let’s say, you are looking forward to add an extra bedroom or an extra floor as an improvement to your home. For example, your current mortgage is somewhere $180,000 while the appraise amount for your house is at Rs. $200,000. Not much scope for equity loan here. The improvement you have in mind will cost $100,000. So after the completion of construction work your new value will be somewhere close to $300,000. Now, thanks to the new mortgage programs, you can borrow funds for your dream home improvements using the “future” appraised value of your renovated home, along with all the equity that follows with it. Plus, the refinance will be available at competitive rates. Exciting, huh?

However, the ratio of these lenders is low. You might have to check with a lot of lenders to come across the ones with the new programs. But to get a construction loan along with a regular finance is worth the effort. So don’t let old experiences stop you anymore from transforming your house into your dream house.