Rising home prices, low-rate mortgage loans and shrinking inventory are contributing to a rapidly improving housing market. People are starting to see their homes as an asset again, one whose value may improve over time instead of decline. If you’re a homeowner who has stayed in your home, you may be asking yourself, ‘Is it time for home improvements?’


After several years of decline, the money you’ll likely recoup on home improvement projects is finally on the rise. While not a guaranteed profit generator, home improvement projects can make life easier, improve the value of your home, and make it more marketable.


Are you going?
If your goal is to increase your home’s value for resale, above all, be sure your improvement correctly mimics your community. A very high-end kitchen remodel, for example, may only pay off in an expensive neighborhood. Over building or choosing projects that aren’t universally valuable can actually harm your return on investment.


Conversely, if you’re the smallest house on your block, an additional bedroom and/or bathroom, especially if it doesn’t overcrowd your lot, could help you compete with other houses for sale in your area.


When making improvements to a home that you don’t plan to stay in over the long term, you should consider the concept of mid-range remodeling. Overspending can diminish the return on your investment; however, affordable improvements can add up to big value increases. For example, modest improvements like new counter tops, flooring or appliances can make a vast difference in the appearance of a kitchen, without adding up to big costs.


Are you staying?
If you’re planning to stay in your home for a long time, you may not be as concerned about fully recouping the money you spend. You may want to make improvements that are valuable to your family, like a new addition or a gourmet kitchen. Or, maybe you’ve always wanted a pool or an outdoor entertainment area. Now is a good time to invest in your home, your lifestyle or your family without worrying about the resale implications years down the road.


If you need to finance your home improvements, you may need to demonstrate your home’s value with a home appraisal. Typically, financial institutions lend up to 80% of your home’s value minus your first mortgage balance.


You can start by estimating your property with a home value estimator, like Zillow.com. We often find these estimates are a little off; however, they are a good start. Divide your mortgage balance by your estimated value and multiply by 100. If that number is less than 80%, your value may qualify for a home equity loan or line of credit.


If you don’t have sufficient equity for a home equity loan and have much needed home repairs to get done, you may consider a personal loan.


For more information, call one of our real estate specialists. We’re happy to help.


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by Hemlata, AVP, Real Estate