Home Equity Loans are an affordable and flexible source of funds for a variety of needs. Using Home Equity Loans for home improvement or remodeling projects means you are able to invest your money in the most beneficial place—your home.
When deciding to set money aside for a remodeling project, there are a few important things to keep in mind. Your return on investment depends on the value of your house, the value of houses in your immediate neighborhood, the housing market in your area, how soon you sell after making improvements, and the quality of the project itself. Factoring all these into your project will ensure that you are spending your money wisely.
After determining these factors, the time comes to determine the home improvement project in which you are going to invest. If you have any structural issues, design flaws, or leaks or cracks in your home, you should stop and immediately set money aside to fix them. If your house is free of structural issues, then it is time to decide upon home improvement projects.
When deciding which project is the best option, here are a few things to consider:
Think Before You Build
It has been known that certain projects such as adding a deck, updating the kitchen or bathroom or replacing the windows have the greatest return on investment no matter the location. In an article for Investopedia, Robert Stammers points out, “Unless the remodeling project is designed to fix a structural issue or design flaw, it is unlikely that a homeowner will earn back more than the cost of construction.” Homeowners also need to think in the mind of a buyer; they need to make sure the projects they are updating have an audience of buyers that are willing to pay for those renovations.
Consider Your Location
When considering any remodeling project, it is important to remember the area in which you live. As Stammers puts it, “One mistake homeowners often make is improving their homes well above the average of neighboring houses.” Time will also be a factor when increasing property value. Building additions or finishing raw space will add value for much longer than projects like updates to kitchens and bathrooms.
Project Returns on Investment
The main reason to remodel a certain part of your home is for the self-enjoyment you receive from living in the new renovation. When looking to profit from your project, it is important to look at the cost vs. value statistic on that particular renovation. For example, minor kitchen update projects have a 75-83% recovery rate.
Maintaining or Building Curb Appeal
It is just as important to make the outside of your home appealing as it is to make the inside appealing. You want to convey a sense of welcome with the outside of your home. As Kathy McCleary states in an article to hgtv.com, "If people drive by your home and are not impressed they're not going to walk inside," If you remodel the inside of your home, but the outside is unappealing, then you will never get the chance to show off the work you put into the inside.
Home Maintenance
McCleary points out that every homeowner's first priority should be keeping the existing structure sound. Maintenance can use up a lot of money and when buyers are limited on what they can spend on a house the last thing they want to do is spend more money for basic upkeep. If they know that the basic systems are up-to-date, they are more likely to buy the house and upgrade the kitchen or bathroom themselves. As McCleary says, “More than 70 percent of buyers who purchased existing homes knew what they were going to remodel before they even closed on the deal.” If the maintenance on a house is too extensive, it can drive potential buyers away.
The More Space, The Better
Buyers who are looking for more space in a home may look at bigger houses only to shortly realize they can’t afford them. To attract these buyers, think about investing in additional features to your home to add some extra space. This can be added storage space, an addition to a room, or the removal of an unnecessary wall to make your home more open and inviting. “Every 1,000 square feet added to a home boosts the sale price by more than 30 percent,” says McCleary. When adding space to your home, remember to keep in mind the value of your neighborhood; you don’t want to price your house right out of it.
For any remodeling project you decide on, make sure to consider the cost vs. value that you will receive from that renovation. Keep in mind that bigger is not always better and by spending more you aren’t guaranteed a greater amount in return.
Home Equity Loans from We Florida Financial feature fast closing, competitive rates, and no closing costs. We offer Home Equity Lines of Credit to borrow what you need when you need it or Home Equity Loans to receive a lump sum for large expenses.
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