Best Ways To Finance Home Improvements

If you are thinking of making some improvements around your home, you are in good company.

 1. Cost Of Home Improvements

A recent survey found that the kitchen is the most frequently updated room in a home. Nearly 30% of Chicago area respondents completed a kitchen remodel or an addition last year. While the median cost for these renovations was $20,000 (for kitchens larger than 200 sq. feet), the average spend on major remodels (in which all the appliances and cabinets were replaced) was $40,000.

Bathrooms were another popular area for Illinois renovations. However, homeowners tended to prefer to make minor updates to guest bathrooms to the more expensive primary bathroom remodels. According to data, 25% of homeowners participated in a renovation of their guest bathroom last year. The median cost was $6,000. The average cost of main bathrooms was 2X more, which may explain why 1 in 5 homeowners chose to remodel this space.

Also, homeowners invested in their homes to make them more secure and functional. In the last year, one in five homeowners has installed home security systems. This is a double figure from five years ago. It’s also one of the most affordable updates, with a median cost of $1000.

Paint was the top option for North Shore homeowners who wanted to improve curb appeal. One fifth of respondents said that they had painted their exteriors with new paint, at a cost average of $3,000.

Below is a table that lists the most popular home improvement projects along with their median costs in 2021.

ProjectMedian Cost
Garage Addition$50,000
Deck Addition$15,000
New Kitchen$20,000
Main Bath$12,000
Secondary Bath$6,000
Home Automation$1,000
Exterior Paint$3,000
Basement or attic finish (sq. ft)$100
Home Addition  (sq. ft)$200

These costs should be considered when you plan your next renovation. While the exact amount depends on your location, the scope of the project and other factors, you can use this guideline as a starting point to plan your next home improvement project. 

 2. Home Improvements With The Best ROI  

The sad fact is that most home improvements will cost more than the value of your home will increase.  For this reason, it is best to only spend your money to improve a home that you plan on living in for a while. That said, there are things that you can do to increase the value of your home and make it more saleable before you put it on the market.

These are the projects you might want to look at if you are getting ready to sell.

  • Minor Bathroom Remodel
  • Landscaping
  • Minor Kitchen Remodels
  • Conversion of Attic to  Bedrooms
  • Replacement of Entry Doors
  • Deck/Patio/Porch Addition
  • Basement Remodeling
  • Windows Replacement
  • Upgraded insulation

If you look closely, you will notice that these high ROI projects fall into 3 categories.

Adding square footage.  If you convert your attic or basement into livable and usable space, you are likely to add value to your home in a way that future buyers will pay for. the same goes for outdoor space such as decks and patios.

Face-lift.  While it is never a good idea to go all out, bringing your home into a modern state of appearance and function by updating landscaping, or doing MINOR renovations to your kitchen and baths often pays off in terms of buyer appeal. As the saying goes kitchens sells houses, but don’t get carried away with your investment if you want to get your money out upon sale.

Energy Efficiency. Increased energy efficiency, in the form of doors, windows and insulation can lower your home’s North Shore natural gas bill, resulting in increased resale value.

 3. Finance Your Home Improvement Projects With These Simple Tips  

Use a renovation loan. Whether you’re buying a fixer-upper or improving your current home, the FHA 203(k), HomeStyle and CHOICERenovation loans may be more affordable than other financing options.

Tap your home’s equity. If you can’t pay for improvements with cash, you may be able to finance them by using your home’s equity. P If you have at least 20% equity, you can likely use home equity loan, sometimes known as a HELOC to finance your renovation.   You should be able to borrow most of the cost of your renovation, so long as your total loan to equity value does not exceed 80%

If equity-based loans aren’t an option, especially when you need to make emergency repairs, consider personal loans or a credit card advance.

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