Planning on making improvements to your house? Depending on the amount of work that you’re considering carrying out, this could be simple and straightforward or daunting and expensive. If it’s the latter, you should definitely consider these vital factors before doing anything.
The Potential Value the Improvements Would Add to Your House
On the average, those who’ve renovated their houses in recent years have recouped approximately 60% of their remodeling expenses. In essence, although renovating might make your house better, it won’t necessarily boost its value.
On the other hand, the real estate market is hyperlocal, which means results greatly differ by region, the price range of your home and neighborhood, as well as the specific types of improvements you’re making.
The Cost of the Entire Project and How You’ll Fund It
Let’s say that you’ve already taken out the first mortgage on your house. You could consider getting a lump sum second home loan that would provide you the money you need at closing on a fixed interest rate.
You could likewise opt for a HELOC, home equity line of credit that would give you money to spend as you go about your renovations. A HELOC, however, comes with a variable interest rate so your rate would fluctuate depending on market trends.
With both options, however, the combined sum of your first and second home loans can’t go beyond 90% of your home’s value. Or if you’re looking to buy a home and then fix it up, you could consider an FHA 203k loan that would enable you to borrow the money you need, under one mortgage, for purchasing your home and renovating it.
The Estimates of the Potential Value and Cost
You could get a much accurate estimate of your cost and the potential value boost to your home by looking at similar projects and checkout line item cost estimates for specific projects that you might want execute.
Then, you’ll just have to find a competent realtor to evaluate your cost estimates and provide you with his or her own estimate regarding how your planned renovations would impact the value of your home.
Do note however that these are not the only factors that need your careful consideration, but working these out early on during your planning stages would make the entire process easier for you.
Once you’ve worked out these factors, you could focus on finding a lender and enjoy the chaos, joy, and sense of accomplishment that you’ll no doubt feel when start and finally finish your renovations.