Top 7 Home Improvement Tips For Increasing Home Equity
Whether you’re planning to move, refinance or apply for a home equity loan or line of credit (HELOC), you have a real incentive to quickly boost your home’s value.
The more buyers like your place, or the higher the valuation an appraiser makes, the better your financial position should be.
However, it’s easy to reduce the return you make on home improvements by overspending or choosing the wrong projects. So read on to discover how to target your funds efficiently.Verify your new rate (Jun 1st, 2020)
1. Do Make A Budget
Even a modest project can add thousands to your home’s value and your net worth. But spending too much on the wrong improvements can actually leave you worse off.
So plan what you’re going to do carefully, and set a strict budget.
Few exercises in life provide more temptations to overspend than upgrading your home. That “gee-whiz” faucet/countertop/wallpaper/tile is so much nicer than the generic model, and it’s only $10/$50/$100/$500 more.
Give in to too many of those temptations, and you could soon find yourself blowing your budget. And that could leave you struggling to pay for all your priorities.
Speaking of which …
2. Do Borrow Smart For Home Improvements
If you’re just upgrading your front door or springing for new window treatments, you may be able to pop them on your plastic and enjoy the credit card rewards or cash back – without carrying a balance, of course.
For bigger renovations, though, consider a range of home improvement loans, including a cash-out refinance, an FHA 203(k) rehab mortgage, a home equity loan, Fannie Mae’s HomeStyle® loan or a line of credit (HELOC).
Mortgage rates are much lower than the cost of unsecured borrowing, and the less you spend for your financing, the higher your return on investment.Verify your new rate (Jun 1st, 2020)
3. Don’t Ignore Your Limitations
If you’ve previously tried do-it-yourself home improvements and have botched the work or left it unfinished, don’t risk ridicule or injury with another attempt.
The world divides into those who are handy and those who aren’t, and few successfully cross the chasm that divides them.
Incomplete or badly-executed improvements are home equity killers. So choose the things you can do yourself (nearly everyone can clean, paint walls and tend yards) and pay a professional to do the rest.
No matter how handy you are, get a qualified electrician in to check your electrical work. And you should probably call in professional assistance with plumbing jobs.
4. Do Pick Good Projects
According to the Remodeling Impact Report from National Association of Realtors and the National Association of the Remodeling Industry, these six projects topped all others for cost performance when selling.
- New Roof – average cost, $7,600, average return: 105%
- Refinish hardwood floors – average cost, $2,500, average return, 100%
- Insulation upgrade – average cost, $2,100, average return, 95%
- New wood floors – average cost, $5,500, average return, 91%
- New garage door – average cost, $2,300, average return, 87%
- New siding – average cost, $12,000, average return, 83%
The return can go higher, depending on neighborhood preferences, and on what you’re starting with.
If a room is hopelessly outdated or in very poor condition, an update could pay much larger dividends.
And even improvements that don’t significantly boost your selling price can cut your time-on-the-market and give you an advantage over other sellers.
A good local real estate pro should be able to help you choose the upgrades buyers in your community want most.Verify your new rate (Jun 1st, 2020)
5. Don’t Skip The Easy Wins
Don’t ignore the less-glamorous fixes that can get you a higher appraisal or selling price:
Who wants a grubby or smelly home? It’s cheap to rent a steam cleaner for carpets and rugs and a polisher for hardwood floors. And many drapes can be steam cleaned or are machine-washable.
Thin your collection of “collectibles,” bowling trophies, family photos and the like. They make rooms look untidy.
Visually enlarge your rooms by storing unnecessary and bulky furniture. You may need the big couch, but can’t you temporarily live without 15 ottomans and Dad’s massive recliner?
Freshen the house with a simple (and cheap) paint job. Use neutral colors that appeal to popular tastes. Buy a home decor magazine to see what’s in or watch some home makeover TV shows.
Create Curb Appeal
Weed, mow lawns, rake leaves and inject color with new plantings or outdoor décor – whatever’s compatible with the season.
6. Do Fix Eyesores
Nothing kills the appeal (and thus value) of your home faster than obvious defects. So once you’ve got your easy wins, turn to these:
- Make sure your roof’s in good order and replace cracked or missing shingles
- Clear guttering and tighten any loose joints
- Replace or repair cracked siding panels
- Make sure your windows are in good shape
- Repair mortar joints in brickwork
- Find plumbing leaks
- Pay a professional to finish or fix botched DIY projects
Potential buyers could request that you make these fixes anyway, if you sell your home. It pays to do the work upfront, and avoid negotiations that cost time.
7. Do Address 3 Biggest Priorities
Real estate agents will tell you these three places grab most buyers’ attention. If you have money in your budget after grabbing the easy wins and fixing defects, here’s where you want to spend it:
- Kitchen — spend $250-$1,500
- Bathrooms — spend $100-$800
- Curb appeal — spend $100- $500
You can make a big difference with affordable and mostly cosmetic changes:
- Replace cabinet hardware (knobs and handles)
- Tighten door mountings and mend drawers so everything closes and opens smoothly
- Replace counter and vanity tops and faucets
- Calk and seal tile and tubs
- Re-tile floors, walls and backsplashes if yours are tired or dated
- Re-grout tile if needed
- Get a new shower curtain or upgrade to a glass door or enclosure
- Replace dated light fittings with modern, fashionable ones
- Buy a new toilet seat
Sprucing up the most visible areas of your home helps you sell quickly. This saves money and frees you up to buy your next home.
Enjoy Your Home Equity
First impressions count with buyers and appraisers alike, so spend your money wisely and make a handsome return on your investment.
What Are Today’s Home Improvement Mortgage Rates?
Current mortgage rates, whether for home equity loans, HELOCs, FHA rehab or HomeStyle® loans, are low enough to maximize your return on investment, whatever renovations you choose to do.Verify your new rate (Jun 1st, 2020)