10 home renovations that could increase your property value
Home renovations can add value to your home while making it a better place to live, and some improvements are more likely to pay off when it’s time to sell. A recent study by Angi (formerly Angie’s List) shared what she describes as the top house features that add value to a property, from intricate feature updates to extensive home improvement projects.
“Upgrade your home with your dream features, and you could add more to the ultimate retail value than the cost of the fitment,” the article reads.
The most value-adding feature across all US housing markets was the pot filler, a kitchen sink attachment that sits above your cooktop and makes it easy to add water while cooking. Angi estimated that this device could cost anywhere from $600 to $2,000 to install — but that it pays for itself at a 3.20% price premium.
Other features coveted by today’s homebuyers that translate into higher property values include:
- pendant lights (2.66%)
- Base cabinet lighting (2.48%)
- His and Hers Sinks (2.35%)
- Barn Doors (2.32%)
- Butcher Block (2.26%)
- Quartz Countertops (2.26%)
- Oversized windows (2.23%)
- Farmhouse sink (2.22%)
- Subway Tile (2.13%)
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The most valuable upgrade also depends on where you live. For example, Angi said that homeowners in the New York area could benefit the most by installing a garage (18.47%) – a coveted feature in a market where off-street parking is very expensive. In San Francisco, known for its year-round sunny climate, sellers can add the most value to their homes by adding a pool (11.35%).
While some of these features are relatively inexpensive to purchase and install, others require a significant upfront investment. For example, adding a garage to your home will cost you an average of $27,500, according to Angi’s HomeAdvisor, while building a pool will cost you about $32,000 on average.
Fortunately, there are several ways to finance renovations that allow homeowners to tap into existing home equity or split their upfront costs into fixed monthly payments. Read on to learn more about home improvement financing, and visit Credible to compare rates on loan products like unsecured home improvement loans and payout mortgage refinance.
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3 ways to finance renovation work
A recent study states that remodeling can add nearly $200,000 in value to the average American homeowner, but many consumers may be held back by the high upfront cost of home renovations. Luckily, there are several ways to finance home improvement projects, including:
Read more about each strategy in the following sections.
1. Cash Out Mortgage Refinance
With a mortgage refinance, you take out a new home loan with better terms to pay off your existing mortgage. Cash-out refinancing is when you take out a mortgage that’s larger than your current home loan, effectively allowing you to pocket your home’s equity in cash that you can use to pay for renovations.
The average homeowner has gained more than $55,000 in home equity in 2021, according to a new report, giving some borrowers the opportunity to access more money than ever with a payout refinance.
Keep in mind that mortgage refinancing comes with closing costs, which typically range from 2% to 5% of the total loan amount. Also, mortgage rates have risen rapidly in 2022, which means it’s important to look for the lowest possible interest rate for your financial situation.
You can visit Credible to compare mortgage refinance rates from multiple lenders at once. This way you can be sure that you are getting a competitive interest rate when financing home renovations.
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2. Home equity loans and HELOCs
Another popular home improvement financing option is a home equity loan or line of credit (HELOC). This is a separate loan on top of your first mortgage that allows you to borrow the equity you have built up in your home.
While home equity loans come with a fixed loan amount and repayment terms, HELOCs allow you to borrow exactly what you need through a revolving line of credit. Both loan options are secured loans that use your home as collateral, meaning the creditor can seize your property if you fail to repay the loan.
Most home equity loans and HELOC lenders allow you to borrow up to 85% of your home’s appraised value. As with refinancing a pay-out mortgage, this type of loan requires the borrower to pay closing costs.
Visit Credible to learn more about calculating your home equity.
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3. Unsecured personal loans
Unlike other secured home improvement financing loan options, personal loans are unsecured and do not require you to use your home as collateral. They allow you to borrow a lump sum of cash that you pay back at a fixed rate in predictable monthly payments over a set repayment period, usually a few years.
Because personal loans are unsecured, lenders determine eligibility and loan terms based on a borrower’s credit history. Applicants with good credit and a low debt-to-income (DTI) ratio qualify for the lowest rates available, while those with fair or bad credit may see higher rates — if they qualify at all.
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Another benefit of using a home improvement personal loan is that lenders offer fast financing. The loan amount can be deposited directly into your bank account the very next business day after the loan has been approved. This is in contrast to home equity options, which require a longer closing period. Also, short-term personal loan rates are currently near historic lows, according to data from Credible.
In the table below you can see the current interest rates for personal loans. And you can visit Credible to get pre-qualified for free by multiple online lenders at once without hurting your credit score.
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