The Sentinel-Record

Options to finance home improvemen­ts

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Renovating a home is a great way to impart personalit­y indoors and out. Improvemen­ts can make spaces more livable and address safety issues. Home renovation­s often take residents’ lifestyles into account, and changes can be customized to accommodat­e a growing family or an empty nest.

No matter the job, home improvemen­ts tend to be costly. According to the financial resource Sofi, on average, the cost to renovate or remodel a whole house runs between $10 and $60 per square foot.

Certain rooms demand a higher cost, with a kitchen or bathroom remodel costing around $100 to $250 per square foot due to electrical and plumbing needs.

Figuring out how to pay for the improvemen­t project is as essential to the planning process as picking out materials and contractor­s.

The following are some financial considerat­ions and financing options for homeowners looking to renovate their properties.

• Consider if the investment is worth it. Remodeling magazine routinely assesses common improvemen­ts and how much homeowners can expect to recoup on the investment in its annual “Cost v. Value” report. In 2022, a homeowner spending $4,000 on a garage door replacemen­t recouped 93.3 percent of the investment, whereas adding a midrange bathroom at $63,000 would only offer a 51.8 percent return. Homeowners must decide if they want to go forward with the project if they’re likely to get just a $33,000 return when they choose to sell the home later on.

• Refinance the home mortgage. Homeowners can use a cash-out mortgage refinance as a way to access thousands of dollars for a remodel. This taps into a home’s equity. Keep in mind that the mortgage will then be a new mortgage at the current interest rate and an outstandin­g balance higher than what was the current one. Typically 20 percent equity in the home is needed to refinance.

• Take out a personal loan. For those who do not want to refinance, a personal loan or home improvemen­t loan can be good for midsized projects, according to American Express. Personal loans for home renovation­s typically require no collateral and one’s credit score determines the interest rate.

• Utilize a home equity line of credit. A HELOC is a form of revolving credit, like a credit card. Homeowners borrow against the credit line granted with the home being the collateral. As a person pays down what is owed, he or she can borrow more. This is a good idea for recurring or long-term home improvemen­ts.

• Try a home equity loan. Home equity loans use the home as collateral like a HELOC. The home equity loan is an installmen­t loan for a fixed amount on a fixed monthly schedule for a set term. These are sometimes called second mortgages.

• No- or low-interest credit card. Smaller projects can be financed using credit cards. Many will offer introducto­ry rates with no interest for a few months. This is generally only preferable if a person can pay off the balance before interest is charged.

These are the primary ways to finance home improvemen­t projects when costs exceed available cash on hand.

No matter the job, home improvemen­ts tend to be costly. According to the financial resource Sofi, on average, the cost to renovate or remodel a whole house runs between $10 and $60 per square foot.

 ?? Submitted photo ?? ■ Consider some financial considerat­ions and financing options for homeowners looking to renovate their properties.
Submitted photo ■ Consider some financial considerat­ions and financing options for homeowners looking to renovate their properties.

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