Are you dealing with an outdated kitchen or lackluster porch? Unsure if you can afford potential home issues like a failing water heater or leaky roof? Turning your house into your dream home is possible, but it can get pricey, fast. Taking a financially savvy approach to home renovations is an absolute must for anyone, regardless of how big your budget is. Here is a look at a few tips to help you get started:
When the Whole House is Wrong
Before we dive into how to handle the costs of repairing a home, we’d like to step back and acknowledge a difficult reality: Sometimes, the whole house is just wrong. No one wants to admit they’ve purchased a home they can’t fix, but it happens. Sometimes it’s a case of trying to fix structural issues that are bound to crop up again and again; other times it’s a situation where you’re looking at major renovations to every room in the house.
Often in these cases, it actually makes more financial sense to sell your current property and build the home you actually want. Hiring a custom home builder allows you to create the space of your dreams. Instead of trying to tweak an existing property until it fits your vision, you can just make your vision from scratch. Talk to some local builders and get a sense of the cost and scope of what you have in mind. This will help you determine whether a remodel is the right choice for you.
Financing for Renovations
Depending on your state, your bank, and the state of your credit, you may be able to take out a loan to help fund the cost of renovations. These are usually shorter-term loans than full mortgages, meaning you’ll need to be able to handle the costs of a quick repayment. Rates will vary depending on how much you need and your credit score, among other variables.
Keep in mind that these kinds of loans don’t always create a 100 percent return on investment – meaning you’ll almost always lose money on them in the long run. However, if they can help you afford to make your home great in the short term, it can balance out. As long as you’re relying on these changes to make your home great for you – rather than some seller down the line – the costs should be worth it.
Another option is to refinance your home. By giving up some equity in your home, you can receive a lump sum cash payment which can then be used to pay for renovations. Be sure to discuss your options with a lender to learn about the pros and cons of refinancing. During this type, it may also be helpful to speak to a counselor if you need to help improve your credit score or eliminate portions of your outstanding debt.
Saving up for Emergencies
Sometimes upgrades aren’t a matter of aesthetics or living preference – sometimes they’re absolute musts. For example, if your roof leaks or your pipes burst, you don’t have the luxury of wondering whether you want to make changes. You have to get them fixed, and right away.
That’s why it’s important to always have a substantial rainy day fund set aside for urgent home repairs. Set aside as much as you can manage each month to go toward these kinds of emergency fixes. You should try to always have at least a couple thousand dollars (ideally more) set aside for these sorts of events. You don’t want to be caught on the hook for a major repair you can’t afford. Remember: Part of responsible homeownership is having these funds set aside.
Whether you’re upgrading your bathroom or fixing a cracked foundation, it’s important to make wise financial decisions regarding your home repairs. Make sure you fully consider your project’s budget before you get started, and save up as much money as you can to fund the repairs or renovations. Depending on the changes, you might even be able to claim a tax credit. With proper planning, you can make the renovations you want without breaking the bank.
If you ultimately decide that you want to sell your house and purchase a new one, trusted real estate advisors Kevin Bartlett & Associates can help you find the property of your dreams in Southwest Florida!