Funding for Home Upgrades
Now that the market has shifted slightly, inventory is rising, and buyers have more options. As a result, you may need to reevaluate the appearance and condition of your home before you list. A little remodeling can increase your home value, but it shouldn’t break your bank. It is essential to research which home renovations are worth the investment before starting on upgrades. Once you’ve determined which renovations offer the highest return, you have to figure out how to fund them. Here are expert tips on how to find funding for home upgrades.
ROI
The 2022 Cost vs. Value Report for Reno, NV, found that curb-appeal projects, including changes to siding, garage doors, and windows had an average payback of 83 percent, compared with about 39 percent for interior upgrades like a major kitchen remodel. While kitchens and bathrooms are known to make or break a sale, be sure that your spending is compatible with the house’s total worth and that of your area if you plan to remodel. You don’t want to over-improve your home because you’ll never get that money back when you sell. It is advisable to check out comparable listings in your area before you begin renovations to keep pace with but not exceed the local market.
Budget
Whether you have money saved or are looking to take out a loan for your upgrade project, you need to create a ballpark estimate of what you are willing to spend. First, browse home improvement stores and sites for materials and fixtures that you like and price them so you can turn your estimate into a realistic budget. If pricing materials yourself feels daunting, you can enlist the help of a sales associate for smaller projects. They will be able to walk you through your options and answer your questions. For larger upgrades, however, it is advisable to enlist the help of a design consultant. A design consultant will be able to help with pricing options and ensure that you don’t leave anything out so that every necessary item makes it into your budget. For extreme renovations that require a contractor, a good rule of thumb is to get at least three estimates. The Real Remodeling Costs tool by Houzz is a great resource for city-by-city estimates on typical remodeling costs.
Financing
You can finance smaller projects with a credit card. You may already have one with a high credit limit and a low interest rate, or, depending on your credit score you could qualify for a new card with 0 percent interest for 12 months or longer. Just be sure to stay mindful of payments and get the balance paid in full before interest begins or you could wind up paying three times over for a small upgrade.
Most large hardware stores offer credit cards or financing options with introductory rates of low or no interest. If your entire project will be completed through the design arm of a large hardware store, that could be an excellent option.
Home Equity
There are a couple of options for using your home equity to fund home upgrades. The most flexible may be a home equity line of credit. A home equity line of credit uses your home as collateral for the amount of credit the lender approves. The upside is that you only pay interest on the money you draw out from the line of credit. The downside is that the interest rate is variable, which could get expensive if interest rates go up while you’re working to pay back the amount you’ve borrowed.
A home equity loan offers the security of a fixed interest rate. With the loan option you get a lump sum and pay interest on the entire amount over time until it’s paid back in full. An equity loan is a great option if interest rates are low, it will end up costing a lot more money to pay back if interest rates are high.
Run the numbers and figure out what makes sense for you, then budget accordingly. If an upgrade or renovation is simply out of your price range then reconsider the parameters of the project. Always consider the economic realities of an ever-changing market when considering home upgrades 1) don’t overbuild the rest of your home or your neighborhood 2) don’t go over budget or put yourself in financial trouble 3) take a step back and consider smaller cosmetic projects that have a big impact.
If you have questions about the Reno real estate market, contact the David Morris Group. We’re happy to be your guide. Give us a call at (775) 828-3292.
