Need money to remodel your home?
Plan Well and Call Your Banker Early

Today, many people are choosing to stay put and remodel rather than move. Remodeling can be a very sound financial decision, especially if you like your neighborhood and/or your home no longer fits the way you want to live.

We often receive phone calls from clients who don’t realize that Private Bank Minnesota offers construction loans, home equity loans and lines of credit. These are excellent financial tools for building or remodeling homes. Many people wrestle with the decision of whether to move or stay put in established neighborhoods with great schools and good neighbors. Some clients looking ahead to retirement want to remodel their homes to fit their changing lifestyles.

One question clients often ask is whether the value of the property they want to improve will support a “typical” remodeling loan. Sometimes the cost of a remodel, even in an excellent neighborhood, may not be supported by an appraisal at the end of the project. If this describes your situation, talk with your banker – we will listen to your needs and work with you to help you make a wise investment. Private Bank Minnesota offers a full spectrum of loan alternatives to help you fulfill your dreams. We will customize your loan and interest rate based upon your relationship with the bank.

Make It Easy On Yourself

Sometimes, clients call us after a project has started, and provisions in Minnesota’s laws can greatly limit the financing options we can offer at that late stage. If you are considering remodeling, one of the most important things to remember is to contact your banker early, even before deciding on a builder or contractor. There are many elements that need to come together simultaneously, especially on larger projects, and we can do more to help if we are involved early in the process. Timing is one example: It could take two to three weeks for an appraiser to look at a builder’s plans and specifications. We will work with your builder to keep the documentation process moving forward, so that when you’re ready to break ground, the money you need is available.

Plan ahead for cost overruns. If you’ve talked to anyone who has built or remodeled, they’ll tell you that most remodeling projects cost an average of 10-15 percent more than the original bid. That’s because you may choose to upgrade carpeting, appliances or fixtures, or you may decide to change something during the building process. It’s important to plan ahead for these change orders and additional expenses. For example, if you’ve lined up $40,000 to pay for a remodel, make sure there are additional funds available to cover any in-process changes.

If you’re tackling a large project, we recommend that you consider using a general contractor. Large projects are complicated and require very precise planning and timing. Hiring an experienced general contractor usually saves both money and headaches in the long run.

Remember These Five Tips

1. Call your banker early. Once a project is started, some types of financing are just not available to the bank. The earlier we know what you need, the more options we have for designing your loan.
   
   
2. Choose a good builder. Check credentials, ask for references and seek a builder who is a member of the Better Business Bureau or a professional building organization, such as the National Association of Home Builders (NAHB) or National Association of the Remodeling Industry (NARI).
   
   
3. Ask for the builder’s terms of payment. If a builder asks for a large amount upfront, be suspicious. This is often a tip-off that the builder may not have good credit with suppliers and subcontractors. Any late payments from the builder to his/her suppliers could cost you money in lost discounts.
   
   
4. Determine who will collect lien waivers. Make sure your contractor collects lien waivers from subcontractors as soon as they are paid for their work.
   
   
5. Ask your contractor for typical cost overrun figures. Experienced contractors are happy to provide this information to make sure that you plan for cost overruns in your financing plan.