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Consider these options when planning home repairs


America is rebuilding itself. The home-remodeling boom is in its third year and going strong. One lender, Countrywide, says it has never had so many loans in the pipeline.

If you're moving to a new address, the odds are high that you'll refashion the home to your taste. You can negotiate a combined mortgage and renovation loan. Alternatively, you might stay where you are and remodel.

In fact, think of the money you'd save if you stayed in place. No sales commission, settlement costs, moving van, fix-up costs on the old house (to appeal to buyers) or on the new house (drapes, rugs, paint). Those savings could add a bedroom, bath or new kitchen to the house you have.

About half the remodeling is done by do-it-yourselfers rather than contractors, according to the Joint Center for Housing Studies at Harvard University.

There's also a growing buy-it-yourself contingent. You shop for the cupboards or appliances you want at a discount center or on the Internet. Then you find an installer. If you remodel, will you get your investment back when you sell the house? That depends on how long you live there, how well real estate prices do, how much the renovation costs and whether a buyer would perceive it as added value.

Redoing the kitchen or adding an extra bathroom generally recoups its cost faster than other improvements, according to a survey by Remodeling magazine.

Realtors warn you not to over-improve. Buyers generally won't pay more than an extra 10 percent or 15 percent for a house that's better than its neighbors, even if you spent more than that on remodeling. On the other hand, you might not care about resale value. Your priority might be space for another child, a playroom or a larger master bedroom. If enough of your neighbors fix up their houses, too, the value of everything on the street should rise. You could recoup your investments together.

Don't use a credit card to cover your renovation costs. The interest rate is too high, and you can't deduct the payments. Instead, take a loan secured by your house, so the interest is tax deductible.

Lenders offer a tremendous number of home-improvement options. Here's what I rounded up:

A traditional home-equity loan, for people with enough equity to cover the remodeling job. You borrow against your house, at an average variable interest rate of 9.6 percent today, according to HSH Associates, which tracks mortgage rates.

The HomeStyle Remodeler, sponsored by Fannie Mae and offered by more than 100 lenders. It's for people with superior credit but not enough equity. You can borrow up to $50,000.

FHA-insured Title I loans. They offer up to $25,000 for credit-worthy borrowers with little or no home equity.

Energy-saving loans. Utilities and other energy-related businesses might offer up to $20,000, for insulating, upgrading your heating and air-conditioning system, installing double-paned windows and so on.

Mortgage refinancing. You can refinance your mortgage for a larger amount and use the extra money for your remodeling project. This works especially well if you want to refinance anyway (for example, when interest rates are down).

Otherwise, it might be cheaper to take a home-equity loan. The interest rate is a little higher on a home-equity loan. But the total cost will be lower, if you repay the loan over a few years. You'll generally save on closing costs, too.

If you don't have enough home equity to cover the renovation, look into a refinancing plan that offers extra money -- a HomeStyle loan, around 9 percent at CitiMortgage, or a 203(k) loan, insured by the Federal Housing Administration (FHA), around 10 percent.

If you're buying a house that needs improving, consider another type of HomeStyle loan. You can get a first mortgage large enough to cover both the purchase and remodeling costs (up to a total of $252,700).

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