Are you thinking of improving your home? Ask yourself these questions to see if this is the right step.
You may be tired of staring at your dated kitchen with its bright green retro appliance and the sheen of the linoleum tile. Or maybe you’re ready to turn your unfinished basement into a play and lounge area for your kids.
Regardless of the specifics, renovating your home is a big decision because of the cost involved. Before you proceed, you need to make sure that it is a smart move.
Should you renovate?
Whether a renovation is worthwhile depends on two key questions:
- Will it improve the value of your home?
- Will it improve your quality of life?
As for the first question, it’s a good bet to speak to a local real estate agent who may give you an indication of which renovations offer a better return on investment than others. Or you can consult this home renovation guide.
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Improving your home will often help you make extra money when the time comes to sell your home. You may not get all of your investment back, but you may get a large portion of it back.
For example, if you renovate your kitchen and spend $ 40,000 in the process, you might get only $ 35,000 of that back in the form of a higher price when you later sell your home. But you don’t necessarily have to get a 100% return on investment – a lot of renovations won’t give you that, but you can better enjoy your home while living in it.
And that leads to the second question. High quality countertops in your guest bathroom may look nicer than your current countertops. However, if this bathroom is barely used then an update might not be worth the money. On the other hand, converting an unfinished basement into usable living space could continuously improve your quality of life.
How to finance renovations
Many people cannot pay for major renovations right away. When you don’t have enough money savings To cover your home improvement needs, you can check out these options.
Borrow against your home
Whether it is a Home equity loan or home equity line of credit (HELOC) allows you to borrow against your equity (the portion of your home that you fully own) and repay that amount over time. Typically, you pay less interest with a home equity loan or HELOC than with a personal loan. So this can be a great option.
Perform a withdrawal refinancing
With a regular Mortgage refinancingYou exchange your existing home loan for a new one and borrow the amount that is left on your original mortgage. But with one Disbursement RefinancingYou are borrowing more than your existing mortgage balance. You can use this extra money to finance your renovation. mortgage Refinancing rates are pretty competitive right now. So if you go down this route, you can grab a lower interest rate than what you charge on a home loan or HELOC loan.
Improving your home could make it a more comfortable place to live. It can also increase the value of your home. If you’re looking to renovate, choose your projects carefully and think about how to fund them so you don’t get too interested in the process.