There are certain things in life that are guaranteed, like death and taxes — and for homeowners, home improvement projects as well. Whether it’s a leaky roof, a flooded basement or a room that needs a facelift, many homeowners spend time and money fixing up their dwelling places. According to the latest American Housing Survey, homeowners made an estimated 115 million home improvements between 2017 and 2018.
The most popular project is adding a deck or patio, followed by landscaping, new flooring or repainting the exterior of the house. These improvements can add value to your home, but it’s important to consider the resale value when making such investments. Some projects will add more value than others, such as a master suite or an updated kitchen. It’s also a good idea to talk to a real estate agent about your plans for resale.
Experts recommend avoiding high-cost, low-return projects, such as installing an indoor pool. The return on such a project is typically just 10%. However, a new front door, window replacements and refinishing the kitchen cabinets are more likely to yield a good return.
A new bathroom or bedroom may also improve your home’s resale value, especially if it’s a full upgrade with a walk-in closet and a dressing area. These projects are also typically less expensive than major kitchen or basement renovations.
Depending on your budget, it may be best to pay for home improvements in cash. This will avoid interest charges and help you complete the project quickly, says Atlanta-area certified financial planner Jovan Johnson. It’s important to make sure you have enough money left over for your regular expenses and emergency savings before taking out a loan, however.
A recent NerdWallet survey found that 80% of homeowners say they’re able to pay for their home improvements without tapping into their retirement accounts or going into debt. In fact, 34% of respondents said they’re able to cover the entire cost of their planned projects. Those numbers are up significantly from last year. The survey also found that nearly all homeowners, regardless of age, report having money set aside for future home repairs or improvements. It’s best to use that money wisely, as it may be difficult to make up for an unexpected expense in the future. If you do need to borrow, an unsecured personal loan can provide a short-term solution. However, it’s a good idea to work with a lender you can trust and be sure you understand the terms of your loan before borrowing any amount. Be aware that the type of loan you choose will impact your credit score. The lender you choose will also have an effect on the rate you get. Some lenders have higher rates than others, so be sure to shop around for the best deal. You can also check with your local bank or credit union to see if they offer a home improvement loan. Choosing the right lender can save you thousands of dollars in interest charges.