Which Home Renovation Loan Projects Are Best or Busts?
Acquiring a home renovation loan, and using that borrowed money to make improvements is a proven way to increase the value of your house, and at the same time, improve the comfort and aesthetics of your living space. But how exactly does borrowing more money end up increasing the value of your home? How can your home renovation loan make you more money should you decide to sell? It’s actually pretty simple.
The value of your home is based off many factors, the biggest likely being its location. But the many amenities and attributes of your living space and attached property also play a big role in determining the value of your home. So for instance, if you purchased your home with an out-of-date kitchen filled with old appliances and unattractive cabinetry and then decide you want to renovate that kitchen to feature all new amenities; doesn’t it make sense that the value of your home would rise.
But before you plan a project and apply for a home renovation loan, make sure that the project you select will actually end up impacting the value of your home in a positive way. The following are some great home renovation loan projects to improve the financial worth of your living space:
Renovating Your Kitchen — A new kitchen can go a long way toward improving the value of your home. According to HGTV, a homeowner can expect to recoup 60%-120% of their investment on a kitchen remodel.
Adding a Bathroom — The same can be said for increasing the number of bathrooms in your household. HGTV estimates a homeowner will recoup 80%-130% of whatever they spend adding a bathroom.
Replacement of Exterior Siding — Re-siding your home can add a significant amount of value to your property. In fact, the National Association of Realtor’s reports that the best choices for improving home value in 2014 are exterior projects, including siding replacement.
Not every home renovation loan project will help you improve the value of your home however. These less-profitable projects are hard sells because they either cost too much, involve a portion of your property that is rarely used, or reflect too much of your own taste. The following are a few projects that may seem like improvements, but actually could end up hurting the value of your home:
Installing an In Ground Pool — An in ground pool could end up being a major turn-off to some prospective homebuyers—especially if we’re talking about a family with young children. The maintenance and utility costs of an in ground pool could also end up diminishing the value as well.
Renovating a Bedroom Into an Office — The amount of bedrooms within a home can make or break the future sale of your home. If you do decide to turn a bedroom into an office, make sure it can easily be converted back. Experts estimate the average homeowner will receive about a 46% return on investment for this pricey remodel.
Building a Sunroom — Sounds relaxing, but don’t be fooled by this home renovation loan project. Sunrooms usually involve many windows, which if not properly insulated, can detract from your home’s energy efficiency in both the summer and winter months. Experts say a homeowner should expect to recoup about $470 for every $1,000 spent on a project of this sort.
A home renovation loan can mean great things for your home, but only if you select the right project. If you’re looking to increase the value of your home, either because you’re planning to sell it in the near future or simply want to improve your living space, a home improvement loan is a great way to get the capital you need to make those improvements a reality.
At Blue Water Mortgage we offer access to various products and programs that will allow you to increase the value of your home. Our team of experienced mortgage brokers possesses many tools, tips and resources to help you make sure you’re making the right decision for you and your family. Contact us today!