Siding and insulation 100+ year old house - any advice?
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Normally, in relatively temperate climates, insulating the floors and ceilings, preferably without a vapor barrier is sufficient. Most problems come with blowing insulation into the walls which leaves the house with no breathing room and almost certain moisture problems which can cause paint failure and moisture buildup within the walls. This is particularly true if you are replacing the windows with air tight units. You might want to research information put out by the National Park Service in the form of the Secretary's Standards for rehabilitation and associated topical bulletins for information specific to the age of your home. Hardieboard is an acceptable replacement, but make sure you really have to replace the wood in its entirety -- repair and selective replacement may be your best and most cost effective option.