by Candy Evans
Your home is likely the biggest investment of your lifetime, and building up its value can help you make the most of your money, especially in a market that continues to see increasing values.
Over my many years as a real estate reporter, and recently armed with a real estate license, I’ve seen so many fabulous home improvement projects. These projects, from kitchen renovations to new master suites and spa-quality baths, add serious dollars to a home’s value. Let’s face it: today’s buyers are more turn-key than ever. They simply do not have the time or vision for a remodel.
But home renovations don’t come cheap. For many homeowners, a home equity loan or a home equity line of credit is the best way to pay for these improvements, whether it’s a small change or a total renovation of a pretty-but-stale space.
In my last blog, we looked at landscaping in DFW, and how homeowners are using home equity loans to make their outdoor living dreams come true. In this blog, I want to examine other home improvement projects I’m seeing around North Texas and how they can add value to your home.
First, the kitchen upgrade or complete kitchen renovation. I’ve seen homeowners tackle these changes to upgrade worn-out surfaces, finishes, and materials, to modernize, and to increase function and livability.
According to the 2015 Remodeling Impact Report from the National Association of Realtors, this is a top Realtor-recommended project for increasing a home’s value and helping cinch a deal.
What’s big right now? Marble or quartz countertops, European-style flat-front cabinets, pulls and fixtures in a soft gold (yes, gold is HOT!), and a floorplan that opens the kitchen up into the living and dining areas. The last one is particularly important for families with little ones—you want to be able to see what they’re up to while you’re cooking.
Remember those eating bars of yesteryear? Millennial buyers prefer huge expanses of counter space. Just removing the breakfast bar and elongating your granite counters out at the same level can add incredible value to your kitchen.
A kitchen upgrade costs, on average, between $20,000 and $30,000, and a complete renovation costs roughly $40,000 to $60,000, according to the Remodeling Impact Report.
Another value-adding home improvement project I’ve seen is a master bathroom refresh. This is also a top Realtor-recommended project to increase a home’s value, as pointed out by the 2015 Remodeling Impact Report.
What’s the best investment? Carrera Marble, dual vanities, LOTS of storage, frameless glass showers, and freestanding soaker tubs. By the way, no one “sits” at the vanity anymore – use that knee space for storage. And those vessel tubs are actually easier to get in and out of than traditional tubs. Buyers absolutely love these amenities! Think “spa-like” and you’re headed in the right direction. If you really want to go luxe, add heated floors or even heated towel racks to your bathroom renovation.
According to the 2015 Remodeling Impact Report, bathroom renovations, on average, cost between $15,000 and $26,000.
So how to pay for these renovations? If you don’t have the money in the bank, don’t worry. (Who does?) Borrowing against the equity you’ve built in your home is a common choice with a home equity loan or home equity line of credit. There are big advantages to both over an unsecured bank loan. First, the rates are typically quite a bit lower, so your monthly payments will probably be lower. Also, the interest paid on a home equity loan or home equity line of credit is often tax-deductible, the same as your mortgage. Last, lots of home equity lenders including Capital One don’t charge closing costs or origination fees – but there might be penalties if you pay off the balance early.
A home equity loan is likely your best option if you know what your budget will be and want even payments over time with a fixed interest rate. Borrowers get a set amount of cash up front, and pay it back on a regular schedule over several years. Home equity loans have low fixed rates, and terms usually are from five to 20 years.
A home equity line of credit is your best bet if you’re not completely sure the amount of money you need for your home improvement project. It’s similar to a credit card—but there’s no plastic involved. Instead, your funds are accessible online (as well as other ways). Homeowners borrow from their line of credit as needed, making payments, writing checks, as they go. They’ve got a set credit limit, based on a percentage of the equity they have in their home. The interest rate is variable, but most companies offer an option to lock in the rate at the time the line of credit is established. Homeowners also can choose to make interest-only payments during the first 10 years.
Capital One has useful tools that make it easy to figure out which option is smartest for you as you look into home improvement projects. Check out their “Help Me Decide” tool to learn the benefits of a home equity loan or line of credit and which is right for you.
Just by visiting CapitalOne.com/home-equity, you can get your customized rate offer and estimated loan amount – with no impact to your credit score.