Your home is likely the biggest financial investment that you will ever make in your lifetime, so why not get the most out of it that you can? With property prices at an all-time high, looking for ways to boost the value even further can see you making even more return on your investment.
Almost every house has something that can be added or improved. It’s up to you to decide where best to put your cash to get the most financial value and personal satisfaction out of your home. We’ll walk you through some of the most valuable improvements that you can make, along with some tips on finding the funding that’s right for your financial situation.
How To Fund Your Renovations
For many homeowners, the cash needed to finance a renovation comes from either a home equity line of credit (HELOC) or home equity loans. Both allow you to capitalize on the equity that you’ve built in your home over the years that you’ve been living there, borrowing against the added value that your property has and using your home as collateral.
If you’re still undecided about whether or not to apply for a home equity loan, take a look at the benefits that this type of credit can give you. Unlike other personal loans or credit cards, a HELOC or home equity loan can actually build the value of your house when you’re using the funds to make improvements. Your renovations are adding additional value, so the cost of the loan is usually offset very quickly.
Interest on these types of loans up to $750,000 is also tax-deductible, which can make your home improvement projects even more affordable. Interest rates as a whole are generally lower than other types of loans, but have similar repayment structures. They’re certainly worth considering if you’re looking for ways to finance your home renovations.
The Most Valuable Improvements You Can Make To Your Home
1. Remodel Your Kitchen
The kitchen, for many families, is the heart of the home. It’s where everyone gathers at the end of each day and countless memories are made over good food and with the best company. There are plenty of options out there for renovating your kitchen, whether you’re looking to completely gut the current one and start over, or simply make a few appliance and furnishing upgrades.
For a midrange home, the average cost to remodel is around $26,000. This could include upgrading stoves, ovens, or refrigerators to more energy efficient models (which means that you’ll be saving on your electric and gas bills!).
You could also make minor cosmetic upgrades, like changing out cabinet hardware or putting in a new floor, all while leaving major cabinetry and structures in place. For most of these updates, the average addition to resale value is roughly $19,000, with a 72% value recoup.
For a major renovation, you’re likely looking to spend around $75,000, with an average addition to resale of $43,000 (or a 55% value recoup). Most of these upgrades involve a complete restructure of your space, with custom cabinets, all new appliances, and even luxury extras like under-floor heating. This is the time to think about whether you need to apply for a HELOC or loan to help finance this size of renovation.
A new kitchen is a major investment. But if you’re thinking about selling your home in the next few years, it’s worth considering. Homebuyers are looking for the latest conveniences and features, particularly in key rooms like the kitchen. If you can only afford to give attention to one room of your home, this is definitely one to think about.
2. Remodel Your Bathroom
Next on your renovation list should be the bathroom. A comfortable and fresh bathroom is a big attraction for homebuyers, particularly if you’re selling an older property. This is where you can really stand out from other homes in a competitive market.
Typical costs for a bathroom remodel in a midrange home are around $24,000, with a value recoup of 60% and additional value added of approximately $15,000. It’s unlikely that you’ll need to completely redesign the layout of your bathroom and most of the costs will be on cabinets, flooring, and showers or baths. Faucets and lighting can also be updated for a low cost.
3. Add A Master Suite
If you really want to make a difference to your home, adding a brand new room can be a great extra selling point. Adding a master suite can be a relatively lengthy and complicated process.
You’ll need planning permits to build over a crawl space or garage, or to add a standalone structure on your existing property. But a renovation of this size is ideal for growing families who want more space without needing to move to a new home.
The average cost for this type of renovation can easily reach $155,000, especially once you factor in architectural planning and labor costs. But with an average $86,000 additional resale value, it can be worth the time and money.
4. Replace Your Garage Door
It may not be the most luxurious of home upgrades, but replacing your garage door can pay off big time! At an average cost of nearly $4,000, a new garage door can net you nearly $3,000 in added value – that’s practically paying for itself!
Older garage door models can become a security risk, especially when they’re in constant use on a daily basis. Modern garage doors are often made with recycled materials and with energy efficiency in mind, easily lasting upwards of 30 years. Newer models can also integrate with smart home systems and are often much quieter than older doors.
When it comes to smaller, less costly renovations to your home, you can’t do much better for your investment than replacing your garage door.
5. Replace Your Home’s Windows
For homeowners who are extra conscious about energy efficiency, replacing your windows is a good place to start. And it’s not only you who’s concerned about environmental sustainability. In today’s world, prospective buyers want to know that they can lower their overall energy costs, along with having the security and curb appeal that new windows bring.
Vinyl windows typically cost around $19,000 on a midrange home, with a value recoup of around 69%. For wooden frames, you’re looking at roughly $23,000, with a resale additional value of $16,000 (67% recoup).
While this may not seem like much, the Department of Energy estimates that around 25-30% of home heating and cooling is lost through windows each year. With more efficient windows in place, you’ll see even more value once you’ve factored in your energy costs too.
6. Add A Deck
When you have a beautiful home, you want to spend as much time there as possible. Once the spring and summer weather hits, that usually means heading outside to enjoy your yard. As a result, decks have become one of the best investments in recent years that homeowners can add to their properties.
Most people think of wood decks when they’re considering adding one to their home. These cost on average $17,000, with a 66% value recoup of $11,000. Composite decks, made from recycled building materials, are a sustainable alternative to a traditional wooden deck. These typically run at around $22,000, with an added resale value of $14,000. Both materials are pressure treated and splinter resistant, which makes upkeep and maintenance simple.
Either option may seem costly, but a deck can add plenty of value, both financial and personal, to your home. It’s a place for cookouts and family meals, or even a spot to enjoy the peace and quiet among your flowers and plants. The change to the outdoor elevation of your home can also be incredibly appealing to homebuyers, making your backyard a truly unique place to be.
Funding Your Home Improvements Can Be Quick and Simple
No matter the type of property you’re buying or already own, there are plenty of different ways to fund your home renovation projects. If you’re looking to purchase a fixer-upper, many mortgages come with the option to include renovation costs in the overall loan amount. Construction loans can also be helpful if your existing home needs to be completely renovated.
At American National Bank and Trust Company, our team will work with you to find the right solutions for your situation. Whether you’re interested in funding for a complete home remodel, or you’re interested in taking out a home equity loan for a smaller project, our team is here to support you.
We know that getting the most out of your home’s value isn’t just about money. It’s about making your space your own, through making improvements that truly turn your house into a home. Contact us today about your plans and to find out more information about the options available to you.