"Unlike

unpredictable returns from today's turbulent stock market, the life improvement

benefits from home improvements, such as a window or door replacement,

are tangible," Waits noted. "Day in and day out, you can see

the aesthetics of your home are more appealing or your utility bill is

lower, feel your house is warmer or cooler or hear that it is quieter.

In fact, you may even notice a little extra sunlight in your home, which

may help family members feel better."

The American

Homeowners Foundation (AHF) agrees that investing in home improvement

has become an increasingly popular method of enhancing the lifestyle of

homeowners. In the mid 1980s remodeling surpassed new home construction

in terms of annual expenditures, and it still leads today.

When preparing

to embark on a home improvement project, here are a few simple questions

to ask yourself to help ensure that the home improvement project is a

good investment.

Am I improving

to stay or move? According to the AHF, it costs approximately 10 percent

of a home's current value to sell and move. If you enjoy your neighborhood

and school system, it may be better to reinvest that 10 percent into home

improvements that will enhance your lifestyle versus moving.

If moving is

a must, then simplicity will be key. A fresh coat of paint can have the

biggest impact on the resale value of your property, because it is a less-expensive

way to make the property visually appealing.

Will my

desired home improvement increase the value of my home? Certain kinds

of improvements will increase the value of your home, others may not.

It is important to determine whether this is the case before you invest

the money. Valuable improvements can include additions to living space

or improvements to bedrooms, bathrooms and kitchens, such as new windows,

fixtures, etc. Amenities, such as swimming pools and tennis courts, do

not add as much to the value of a home.

How do I

determine how much money to invest in home improvements? Whether you're

planning to stay or move, you should try to avoid over-improving. If you

invest "too much" on improvements, you might make your home

more valuable than the value of the neighborhood. Remember the old adage,

"Buy the worst home in the best neighborhood rather than the best

home in the worst neighborhood." For example, if you live in a neighborhood

of $100,000 to $150,000 homes, investing $200,000 into the house may mean

you will not recover all or part of the cost of the improvements if you

intend to sell it.

However, don't

let the fear of over improving discourage you from moving forward with

a project. Depending on the scope of your home improvement project, there

are a variety of products that are beautiful and cost-effective to fit

any budget. Just remember, you home's value should be no more than 20

percent above the average.

What if

my home improvement project costs more than I am initially able to invest?

Recent changes in tax laws have opened up home equity for a variety of

uses, including home improvement. Today, home improvement can often be

financed at low rates and over a long term by simply taking advantage

of the current low mortgage interest rates. If mortgage rates are low,

cash out mortgage refinancing may be the best way to refinance the remainder

of your home improvement project.

Will capital

improvements increase the tax basis of my home? Making improvements

to your home may increase the tax basis. When selling a home, the gain

is determined by subtracting your basis from the net proceeds. Be sure

to save records of all capital improvements made to your home. Capital

improvements do not include maintenance or repairs.

To learn more

about investing in home improvement, contact your local financial advisor;

the American Homeowners Foundation at www.americanhomeowners.org, (800)

489-7776 or the National Association of Homebuilders at www.nahb.org,

(800) 368-5242. To find out more about windows and doors, contact the

Window and Door Manufacturers Association at www.wdma.com, or Pella Corporation

at www.pella.com, (888) 84-PELLA.

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