Many homeowners take on home improvement projects for a variety of reasons. Whether they’re looking to boost curb appeal, make their home more energy efficient or increase resale value, these changes can be a great investment. However, not all improvements are created equal. It’s important to consider which upgrades will give you the best return on your money, especially if you’re planning on selling your home soon.
The National Association of Realtors (NAR) reports that homeowner spending on home improvements hit an all-time high in 2021, with 3 in 5 homeowners having done renovations in the past two years. The surge is attributed to a combination of factors, including rock-bottom interest rates and aging baby boomers who are more likely to be financially equipped to pay for renovations. Those who rely on mortgages to finance their home improvement projects may be able to reduce the cost of the project by adding an equity line or refinancing.
In addition to saving on interest, homeowners who have a strong credit score might be able to qualify for a personal loan with a lower rate than a traditional home equity loan or HELOC. It’s important to research lenders and pre-qualify for a loan before you start your project. This will allow you to compare loan offers and speed up the application process. It’s also a good idea to collect documents such as a bank statement, employment verification and tax returns before you apply, which can help reduce the amount of time it takes for your lender to verify your information.
If you’re considering a major home improvement project, it’s wise to consult with a real estate professional about what renovations will add the most value to your property. An agent can also advise you on how to finance the project without putting your house at risk. It’s also a good idea not to spend too much on your home improvement if you plan on selling it soon, so you can avoid paying more than your house is worth when you sell.
Generally speaking, the highest ROI home improvements are those that improve your home’s exterior. Replacing a worn doorknob, cleaning out the rain gutters and repairing sidewalk cracks are relatively inexpensive fixes that can have a big impact on curb appeal. In addition, trimming shrubs and laying mulch are easy ways to give your yard an instant facelift.
Home improvement projects that don’t add much value might include those that are too personalized or that don’t fit in with the style and size of other homes in your neighborhood. It’s also important to remember that the majority of home improvement projects don’t recoup their full costs, so it’s crucial to be budget-savvy and only invest in upgrades that will benefit you in the long run. The most successful DIYers use a spreadsheet or budgeting app to track expenses throughout the project, which can help keep costs in check and prevent overspending. The same goes for hiring a contractor, which can add up quickly. If you’re going to hire one, always get estimates from multiple providers and choose carefully based on their experience and track record.