Homes, like people, are a work in progress. Using the equity you’ve acquired in your home to enhance your home’s features, quality of life, and property value can be a very wise investment. Now that spring is in full swing, it’s time to contact contractors for quotes and to schedule the home improvement projects you are considering. Those who delay may have to wait until late summer or fall to reap the benefits of the upgrades. After finalizing a contractor and quote, keep in mind low-interest funding options such as a home equity loan and home equity line of credit.
What is Home Equity?
Home equity is the difference between a property’s fair market value and the outstanding loans and liens on the property. By deducting the amount owed against a property from its current value, homeowners can establish the amount of equity they possess. That figure remains a valuable and cost-effective asset that can be put to work using a home equity loan (sometimes called a second mortgage) or home equity line of credit, turning your spring home improvement project wish list into a reality.
The 5 Best Home Improvement Projects to Tackle This Spring
Homeowners who decide to leverage their equity usually keep an eye on return on investment (ROI). The approach savvy financial planners take generally weighs two factors. The first involves using equity to make upgrades that also add to the resale value. This strategy allows people to use equity to create more equity. The concept runs along the lines of the adage, “it takes money to make money.”
The second consideration revolves around the peaceful enjoyment of a living space. In other words, certain home improvements generate a more preferred quality of life experience than others. That being said, these rank among the most popular home improvements that deliver significant quality of life and financial ROI.
1: Upgrade Your Landscaping
Winter cold snaps do considerable damage to trees and plant life. Allowing trees to remain in a fractured state invites pests, rot, and blight. Taking care of these and other issues when the warmer weather arrives generally saves homeowners the cost of complete tree removal later. Given that landscaping is already on the table, spring can be a perfect time to use your available equity for a complete backyard makeover. Adding gardens, fencing, and enhancing your overall curb appeal increases property values and offers a great return on your investment.
2: Create an Outdoor Oasis
In addition to landscaping, upgrading or expanding your outdoor living space is another top way you can enhance your quality of life while receiving a great return on your investment. Adding a deck, veranda, or patio, expands a property’s usable square footage. If you already have a patio, investing in an outdoor kitchen, bar or fire pit extends your ability to entertain and your expected return on investment. One final step to complete your outdoor oasis would be finishing your space with a hot tub or pool. No matter what home improvement project you take on this spring, Finex Credit Union can help.
In-ground pools run upwards of $35,000 on average, while outdoor kitchens cost $10,000 to $15,000. Using equity to make these upgrades during the spring allows you and your family to enjoy them all summer long.
3: Re-Side Your Home’s Exterior
The cost of replacing aging siding averages $10,000 and ranks among the top financial ROI projects. New siding has an estimated resale return upwards of 78 percent. Although giving the house a facelift won’t necessarily enhance your leisure experience, it will make you feel good about the curbside appeal. It’s essential to find a contractor to schedule work before construction professionals become fully booked.
4: Repair Your Roof
National estimates peg the cost of a new roof at approximately $7,211. Depending on the size and materials used, homeowners generally spend between $4,707 and $10,460. Like siding replacements, a new roof isn’t a luxury, it’s a necessary evil. Preventing water and moisture from entering your home reduces significant risks of rot and hazardous mold growth. A new roof not only adds resale value, but it also protects the sizeable investment you made into homeownership.
5: Create Your Dream Space
People who want to maximize the enjoyment of being at home often focus on projects that are personal to them and their passions. Adding a room to serve as a yoga studio, fitness center, or quiet personal office space are just a few examples of how homeowners use their equity to add to their home’s value as well as their quality of life. The cost of labor and materials ranges between $86 and $206 per square foot, and homeowners usually spend more than $22,000 when hiring professionals to build an addition. No matter the size of your expansion or upgrade, remember that timing matters. Contact potential contractors now and get quotes as well as a timeline for when your project may fit into their schedule.
How to Pay For Your Home Improvement Project
Start now, if you haven’t already, by gathering construction estimates and adding a 20 percent cushion to that number before finalizing your home equity loan or home equity line of credit loan amount. This will help cover the cost of any unforeseen additions. A home equity loan allows borrowers to take out a lump sum to fund a preferred project. Sometimes called a “second mortgage,” a home equity loan ranks among the most cost-effective ways to gain the ROI you desire.
Another option involves a home equity line of credit, also known as a HELOC. This opportunity offers homeowners access to their equity in a structure like a credit card. Borrowers enjoy a draw period in which to use the money and typically only pay the interest on the amount you've borrowed. After the draw period ends, homeowners enter the repayment period and are responsible to pay the loan back over a defined timeline.
If you are ready to utilize your home’s equity for your home improvement project, apply for a home equity loan or home equity line of credit online today. If you have any questions about the amount of equity available in your home, or if you have questions about which solution is best for your project, contact Finex Credit Union today!