Know your options
Whether you’ve been in your home for two decades, or you are planning to buy your very first fixer-upper, you are probably familiar with the concept of renovations. Renovating old homes and bringing them back to their former glory has been catapulted into the spotlight in recent years, with the advent of an entire television channel dedicated to the concept. While tearing down walls and turning an old home into something new might seem appealing, it is important to remember that not all renovations are created equal, and financing renovations can be a bit of a chore.
What is a Preventative Renovation?
Preventative renovations are defined as a renovation that is completed in an attempt to prevent problems or further damage to a home. For example, a house that has a roof that is more than 15 years old is likely to need a complete reroofing in the next several years. Instead of waiting for the roof to begin leaking, many homeowners will opt to get a new roof before problems crop up. This can help prevent future issues with moisture and leakage.
The same is true for windows. While the windows may appear to be in good shape, a homeowner may opt to add new, efficient windows into the home. Not only will this add value to the house if you are considering selling, but it can also significantly cut down on the cost of heating and cooling bills by preventing drafts and leaks.
What Renovations are the Most Beneficial?
Figuring out which home renovations are most beneficial is going to largely depend on your plans for the property. New roofs and windows are most advantageous to the current homeowner, as it will make the home more efficient and cut down on utilities over the long run. While it may be a benefit for those shopping for a home, it doesn’t have the same selling power as a more visual upgrade. If flipping or selling the home is of interest, top-notch landscaping offers a 105% return on the investment. A minor kitchen update can recuperate 80% of its costs, while a bathroom addition will recover about 50% of its value, but in some markets, it is required to make a sale.
What are my Options for Financing Renovations?
If you are considering preventative or aesthetic renovations, there are several financing options available, but not all are created equally, and all of the options will require you to assess your budget and your spending. Cash is an optimal choice, but saving up enough money for a major renovation while still paying your day-to-day bills can be difficult. Cash can be used for small improvements, like changing out lighting, or painting rooms.
More extensive renovations are best left to home equity lines of credit, personal loans, or credit cards. If you consider yourself a weekend warrior and plan to do much of the actual labor yourself, a home improvement credit card might be a good fit for your needs. You’ll be able to buy materials on credit and pay the balance off, while you earn rewards and points as you purchase materials.
Home equity lines of credit and home equity loans are a better fit for larger, more intensive renovations. Loans are a good option if you have a contractor working on your project, and you need to pay them upfront. You can discuss with your lender your repayment options and find a payment structure that works best with your budget. The same is true with personal loans.
An older home will need work at some point during its lifespan. In fact, every home is sure to need some improvements as life moves forward and trends change, but figuring out which renovations are most beneficial and cost-effective can be difficult. Picking renovations that will work for your family, while improving the value of your home, is essential during the process. Remember to discuss your plans with a financial planner before taking on a large amount of debt for renovations, whether they are preventative, or purely for curb appeal.
Equal Housing Lender