Home improvement, or renovation, involves adding to or improving the value of a house. It includes repairing, refinishing or replacing surfaces, such as flooring, walls, paint and countertops. It also can mean installing or repairing fixtures, appliances and systems like heating and cooling, plumbing and electrical.
The home improvement industry is big business. Home Depot alone reported sales of $160 billion for the quarter ended January 31, 2023. Homeowners often use home improvement loans to pay for these projects. However, it’s important to understand how these loans work before you start any project.
When you borrow money to complete a home improvement project, you’ll be paying both the cost of the loan and interest. This can quickly add up and make your project more expensive than you originally planned. Instead, consider using cash or credit cards to pay for your home improvements.
A common reason for a home improvement is to make the property more appealing for sale or rental. For example, if you have an ugly backyard, you can create a beautiful garden or add a deck to enhance the curb appeal of your home. It is important to keep in mind, though, that the improvements you make must be consistent with the style of your neighborhood and the price range of homes nearby. Otherwise, you could price yourself out of the market.
In addition, it’s a good idea to renovate for the enjoyment you will get out of your home. A new kitchen or bathroom can improve your quality of life and help you feel more satisfied with your home. If you think about selling in the future, you may want to discuss your ideas for improvement with a real estate professional to ensure the changes will be attractive to buyers.
Some improvements can have a greater impact on your home’s value than others. For instance, a new energy-efficient furnace or insulation can decrease your utility bills and increase the value of your home by making it more attractive to potential buyers.
If you’re considering making any high-end improvements, it’s important to speak with a real estate agent or contractor to make sure your ideas are in line with the current market and will be attractive to buyers. For example, if everyone in your neighborhood has a hot tub, you may not see much of an ROI from installing one yourself. On the other hand, a primary suite (a bedroom with its own bathroom, walk-in closet and maybe a dressing area) can increase your home’s value by up to 10%. This is because it makes your house more attractive to families with children.