For the past 30 minutes, you’ve been waiting in line to use your home’s only bathroom and all you can think about is how badly you want to add a second. You might be daydreaming about how nice it would be to sunbathe on the outdoor patio only to remember that you don’t have one yet. If either of these scenarios, or anything like it, sounds familiar, you may be contemplating a home remodeling project.
Many homeowners fund their remodeling projects with a home equity loan. This type of funding can be risky, but it can also be a smart choice for certain renovations that have a high return on investment. Here are 4 that are particularly good choices:
Do you live in an older home? If you’ve lived in an older abode for many years, you should probably hire an electrician to check your wiring. Older homes were often equipped with inferior materials, such as knob and tube wiring, that have been supplanted by safer options throughout the years.
Since upgrading unsafe electrical systems is a necessity, it is a good remodeling project to finance with a home equity loan. You probably don’t wish to compromise your safety while saving up the money to replace your wiring. If you plan to sell your home in the near future, you may even be able to seal the deal by mentioning your newly updated wiring.
Upgrading plumbing systems is another good project to fund with a home equity loan. If your pipes are leaking, you may be slowly accumulating expensive water damage. For example, a leak in your kitchen sink might completely destroy sections of your hardwood flooring. A leak in an upstairs bathroom may damage the ceiling in a downstairs room. These types of issues need quick attention. Therefore, you can’t afford to delay them due to a desire to save needed funds.
Do you want to add additional space to your home? If you need more room, adding a bathroom is usually a good investment. Bathrooms often sell homes. Therefore, you should probably recoup most, if not all, of your investment when building an additional bathroom in your home. A home equity loan can help you pay for this project. Before starting construction, talk with a financial advisor and an appraiser about the soundness of your decision. If you’re borrowing money against your home, you certainly don’t want to create negative equity by taking on a renovation.
Like bathrooms, kitchens are usually vital components to successful home sales. If you plan to sell your home soon, you may want to think about doing a kitchen remodel. However, you don’t want to go overboard. This is especially important if you will be paying for your remodel with a home equity loan. To improve a kitchen without breaking the bank, you can get creative. For example, you can reface and paint older cupboards instead of replacing them. An inexpensive adhesive backsplash can be installed as an alternative to a custom mosaic one made out of natural stone.
In some instances, a home equity loan is the smart choice for paying for home remodeling projects. If you’re using a home equity loan to finance your project, you will likely benefit by talking with a financial advisor or appraiser before calling a contractor. They’ll help you crunch the numbers and make the best decision for you and your house.