Looking to Increase the Value on Your Home?
Purchasing a home is a significant milestone in one’s life…AND it is thought of as one of the largest financial investments in your future! While regular mortgage payments pay down the loan balance on the home loan over time, there are additional improvements and adjustments you can make to your property that will rapidly increase the market value of homes and provide a significant return on your investment. So, let’s take a deeper dive into some home improvements that can increase the value of your home and then cover ways you can fund those improvements.
How to Increase Equity on Your Home
Homeowners should explore simple, low-cost ways to raise the value of their property, especially if they expect to sell soon. If you’ve been considering how to increase the value of your home or wondering which home upgrades increase value, keep on reading!
Increase Energy Efficiency
Due to greater attention on environmental issues and an awareness that energy efficiency reduces costs on utility bills, today’s homebuyers typically place a larger focus and value on eco-friendly energy-saving amenities.
If you’re replacing in-home items, such as your stove or furnace, look for energy-efficient models that can help you save money on your electric and gas bills.
There are many contractors out there that are trained on quick and easy improvements that can be made to the structure to increase the energy efficiency. Consider replacing your old thermostat with a smart, Set Back Thermostat that saves you money on energy. Upgrading old leaky windows and seals around doors does more than you would think!
Focus on Finished Square Feet
The amount of square footage has a significant impact on the value of a home. Realtors regularly will use price per square foot to help clients compare homes with similar styles and upgrades.
Larger homes usually attract higher prices, and even if an appraiser doesn’t recognize the full worth of the extra space, many times additional living space can be created by designing decks, outdoor kitchen areas, and finishing out a basement. A buyer will surely notice!
The obvious option to really expand your home is to add a room. Square footage is defined by spaces with floor coverings, as well as finished walls and ceilings. This is currently a very popular way to go to improve your home value and make it more functional for your needs. This however, is more expensive and would be more of a long-range plan.
Create or Improve High Equity Rooms
Kitchens and bathrooms are two spaces in a home that usually impact prospective purchasers the most. They’re also the areas of your home that go out of style the quickest, like appliances, materials, as well as décor.
As a result, investing in kitchen and bathroom renovations is a wise decision. Bathroom upgrades and renovations are particularly cost-effective, especially if you’re building a new bathroom or expanding to a larger size.
Consider Curb Appeal
Enhancing curb appeal is an important step in increasing the marketability of your home.
For example, an overall landscape makeover can go a long way. Adding a paver front walkway, as well as stone planters, shrubbery, and mulch, could all help to increase the value of your home.
A fresh paint color is also listed as what catches the eye of a prospective buyer first!
If you don’t expect to sell right away, a new deck or outdoor kitchen can increase the value of your home while also making it more comfortable and livable.
Updates/upgrades seldom return their entire cost, but they can improve your family’s comfort and possibly help you sell your home faster and for more money. If you don’t have the cash to pay for home upgrades that increase value, there are other alternatives!
Do yourself a favor and search the “value of my home”. While you’re now aware of how you might be able to add value to your home, the question will be how to pay for everything?
People have utilized everything from getting a gift from a family member to all the different ways to finance it…short term and long term! One thing to remember if you are doing these upgrades to sell your home to buy another property, be aware that any additional borrowing could change your credit scores and or increase your debt ratios!
Putting home improvements on a credit card could be a good idea if you can pay off the entire amount in a reasonable timeframe. Just remember, from an Interest rate cost, this is the most expensive alternative unless it can be paid back quickly! Extensive work might be out of reach of your credit card limitations.
Home Equity Loans
Home equity types of loans can come in a couple of different plans.
There are pure 2nd’s that might be appropriate. Basically, you are going in and borrowing a portion of the equity built into your current home value. This creates a lump sum amount of money that you can then use for the project(s).
Another type is a Home Equity Line of Credit, sometimes referred to as a HELOC. This is something akin to the concept of a Credit Card where the equity can be drawn on, paid back, and then used again…creating an Open-Ended account. It would have limits on the amount accessible based upon the current equity.
Both options convert the properties equity into useable capital…without disturbing or changing the 1st mortgage already in place.
Interest rates, fees, monthly payments, and tax advantages are all factors to consider with home equity loans and HELOCs.
Many times, a more economical way to get access to your homes equity is to do a complete new Cash Out Refinance. It gives you the lowest rates and helps spread the monthly cost over a longer period. The cash out can be used for many purposes…home improvements, but also to pay off higher interest rate debts, college tuition, or any number of other investments. It is a good way to turn the passive equity into active purposes!
It has been reported that more than half of homeowners who participated in a cash-out refinance used the money they received for home improvements that increased value.
Not all of these options are right for every borrower! It is best to chat with a mortgage Loan Officer to investigate each alternative and then decide which is best for you and your family! Big Valley Mortgage has Loan Officers that would be happy to discuss your goals to help you figure it out. Another tool that might help make it easy is our convenient refinance mortgage calculator to give you an idea of what you could be approved for. Either way, we look forward to helping you!