Buying a house is a significant investment, and you want your home improvement projects to increase the value of your home. So before you start spending your savings or take out a loan to pay for the project, make sure your improvement gives you a good return on your investment. An example of a value increasing home project is updating your kitchen or bathroom. Projects that involve laying down carpet or turning a garage into a family room could hurt your home's value.
2. Home improvement starts with research.
It's essential to know just how much your home improvement project will cost before you get started. Websites like homeadvisor.com can help you estimate the cost in your area and help you find professionals who will work with you. The more professionals you ask to provide an estimate, the better because you can weed out the companies that are overcharging and find a reputable contractor that can fit in your budget.
3. Be prepared for the unexpected.
Home improvement budgets need to have room for emergency spending. If you find an issue with your plumbing or electrical wiring during the renovation, you can't ignore it. One example of this is dangerous electrical wiring left in an older home. These types of things can't be left unfixed, and if you don't address them, it could be a disaster and hurt your home value later. Besides, a licensed contractor isn't going to continue their work without fixing these types of problems, so it is best to have a contingency budget.
4. Small changes add value.
If a complete kitchen or bathroom remodel is out of your budget, keep in mind that fresh paint goes a long way. Use modern colors, so your space does not look dated. Fresh paint will make your house more appealing to potential buyers. You can also make simple changes, such as replacing the cabinet hardware in your kitchen or bathroom. Replacing existing light fixtures is another low-cost DIY improvement that will make your home look fresh.
5. You can finance your home improvement project.
If you have paid down a significant amount of your mortgage, you might have quite a bit of equity to finance the home improvements you wish to make. You'll find that home equity loans have a low-interest rate, and the interest that you pay on a home equity loan is tax-deductible if you use the money to improve the value of your home. On the other hand, when you get a home equity loan, you are putting your home up as collateral, and if you stop making your payments, you put your home in danger of foreclosure. If risking your home for collateral gives you anxiety, you can find unsecured home improvement loans with a slightly higher interest rate. While the interest rate may be higher, they still carry the benefit of one fixed rate and monthly structured payment. These loans are a great alternative to Home Equity Loans if you want to hold on to the equity in your home for debt consolidation or as part of a college funding or retirement funding plan.