How to Finance Home Improvement
Home improvement is the work done to make a house a more comfortable and attractive place to live in. It includes both interior and exterior renovations. Interior work may include remodeling kitchens and bathrooms, refinishing hardwood floors, or adding new fixtures and lighting. Outside work may include building a deck, installing a pool, or landscaping. Home improvements can be done by professional contractors or by the homeowner.
Homeowners are spending more time at home during the coronavirus pandemic, and many have used this opportunity to tackle do-it-yourself projects around the house. This has led to an uptick in spending on home improvement and repair, with people ages 55 and older being the driving force behind this trend. The average homeowner who completed at least one home improvement project in 2019 spent $6,438, according to NerdWallet data.
The most popular home improvement projects are those that add living space, such as expanding the kitchen or adding an extra bedroom. While these projects are great for increasing your living comfort, it’s important to keep in mind that you’re not necessarily adding resale value when you do them. You’ll often see better returns on home renovation projects that improve energy efficiency, such as installing a smart thermostat or replacing old windows.
Some homeowners choose to renovate purely for resale purposes, but this is not always the best option. If you’re planning to sell your home in the future, it’s a good idea to speak with a real estate agent about what upgrades are most desirable in your area. But even if you’re not planning to sell, renovating solely based on what adds the most value can lead to a showplace home that doesn’t feel like your own.
There are plenty of ways to fund home improvement projects, from saving up cash to taking out a loan. Here are some of the most common options:
A HELOC, or home equity line of credit, is a revolving line of credit that uses your home’s equity as collateral. It’s a convenient way to finance home improvements and other expenses, but you should only use it for approved expenses. Some lenders will only lend you up to 80% of your home’s value, so be sure to consider that when choosing a loan amount.
Before you start any home improvement projects, take the time to learn more about your options and find a lender that’s right for you. You can also ask friends and family for recommendations. It’s also a good idea to check out the Maryland Home Improvement Law, which requires that contracts for home improvement work be in writing and signed by both parties before work begins. The contract should have the contractor’s name, address, and MHIC license number preprinted. In addition, a contractor may not accept more than 1/3 of the contract price as a deposit. Moreover, the contract should clearly state the total cost of the project.