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Navigating Home Improvement Costs

May 4, 2020

Posted in Life Moments

These days, most of us are spending much more time in our homes. It quite suddenly became our place of work, play, eating, sleeping and, well, pretty much everything! We might find ourselves noticing what we really like about our homes as well as dreaming of how great it would be if only this or that were different. One of the perks of owning a home is that you can make any change you want to it! However, just because you can, does this mean you should? 

Let’s think about this: There are some really good reasons to make home improvements, but you may discover some better alternatives to accomplish the same goal if you take time to think it through and answer some questions. The WHY question is a good place to start and a big part of which path to go down. Why are you wanting to make a change? Is this home improvement project for your benefit, or are you hoping to make a return on the investment?

A large majority of improvements do not increase the value of your home dollar for dollar. In fact, if you’re interested in seeing for yourself, check out this website: The data suggests in almost all cases you need to have a different reason for home improvement than increasing the value of your home. You only get back what you paid in very few instances. Reviewing this website is also a good reality check to see on average what improvements actually cost as you weigh that against its value to you and how much you can afford.

Two of the best reasons to make home improvements are to greatly increase the enjoyment of your home (it’s hard to put a value on this!) and to allow you to stay in your home longer than you would have otherwise (moving is expensive!).

I am currently in the middle of a home renovation project for both of the reasons above. We had gotten to a place in our home where the current set up was no longer working well. The decision came down to moving or making some changes. There were many reasons to want to stay: it’s cheaper than moving, our location is ideal, we love so much about the house including the yard and the direction the home faces for maximum solar, and last but certainly not least staying allows for continued community that would be lost in a move. So, instead of moving we decided to make some changes!

It’s easy for costs to start to run away from you as you see options that are just a little bit nicer or a little bit bigger than you originally intended. I’ve found that it’s helpful as I’m making decisions to keep coming back to the questions: “Now why I am doing this remodel again and what am I trying to accomplish?” This has kept me from upgrading to more expensive materials, or choosing another feature that would be nice but not add a lot of additional value.

Even with keeping our costs down, we still decided to take out a home equity line of credit (HELOC) to keep from having to pay the whole thing upfront. In deciding where to go for a HELOC, I learned it was important to look at all of the following, not just the interest rate: 

1) How long is the introductory rate good for? 2) What is the minimum draw requirement? 3) What is the draw period? 4) Is there an average balance I need to keep? 5) What are the closing costs and annual cost? 6) Is there a cancellation fee? 

If you’re considering making changes for the purpose of getting your home in better shape to sell, large scale remodels are generally not necessary. Instead, focus on improvements that make the biggest difference to buyers such as repairs (faucets, screens, etc.), sprucing up your exterior (curb appeal!), a fresh coat of paint, and minor upgrades to kitchen and bathrooms. These are often sufficient and will cost you much less than a full-scale remodel.

Creating a space you love and works well for your current lifestyle is a great thing! And it might just be that a home improvement of some sort is just the thing for you. But be sure to go into any project with your eyes wide open. Make sure you have thought through your ultimate purpose behind the changes and have determined the best way is to accomplish this in a reasonable and affordable way. Your financial planner can also help determine how this fits in with your overall financial and lifestyle goals. 



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