Financial Tips for Remodeling Your Home

With spring here and summer coming with warmer weather soon, you may be thinking about a change to your home, whether it be buying a different home or remodeling your existing one. With interest rates at their highest in over 20 years, the cost of moving into a new home could be quite large. Home prices have increased tremendously in recent years, so principal payments and tax property payment may increase. That means your mortgage payment on a new home could be significantly higher. Therefore, it may make the most financial sense to stay in your current home and remodel it instead.

If you aren't considering buying a different home, aside from current financial considerations, there are many other reasons why you could be considering a home remodel. For one, a home improvement project can increase the comfort of your everyday life, creating the luxurious lifestyle that many find comforting. For others, a home remodel may be a necessary health and safety measure. No matter the case, taking into account the following five options may help you maintain financial health during and after the remodel, while still enjoying the home you’ve envisioned for yourself.

Consider Energy-Efficient Systems

When possible, opt for energy-efficient setups and materials. Energy-saving windows, for example, are designed to keep hot or cool air inside your home, reducing the strain on your heating and cooling systems and lowering your energy-use costs. Similarly, insulation upgrades can reduce heat and air loss. Other methods for saving energy include the use of high-quality HVAC systems with automated adjustment settings and the use of water systems, such as tankless water heaters that offer hot water only as needed. Not only could you save on energy costs, but in many cases you can also claim a tax credit on your tax return for using energy-efficient equipment or receive a rebate from utility companies or various organizations or agencies in your city, county, or state.

Use Durable Materials

Choosing long-lasting materials can prevent the need for repairs in the future, lowering the cost of maintenance. On the exterior of your home, choosing PVC or composite lumber for remodels, such as the construction of a new deck, results in less maintenance in the long run when compared to a material such as wood. Unlike wood, PVC and composite lumber won’t splinter or crack over time, and may not rot, which is ideal if you plan on living in your home for many years. On the interior of your home, opting for durable materials can also lower maintenance costs. For example, when renovating your kitchen, hard-surface countertops made of granite or other synthetic materials are easy to clean and maintain.

Increase Comfort & Lower Healthcare Costs With Preventative Measures

Setting up your home to reduce the chance of accidents can lower healthcare costs while increasing your comfort. Updating floors with non-slip flooring minimizes the chances of falling, reducing the possibility of injury. Another simple change you can make when renovating is to replace knobs with D-shaped pulls, which are easier to grip. Overall, taking preventative action can make your home more comfortable and reduce accidents. Doing so can lessen the chance that you’ll need to make even larger remodels down the line to accommodate reduced mobility as you get older.

Remodels Can Increase Your Property Value

If you’ve thought of selling or renting your home in the future, the right home improvement projects may boost the value of your home, and at the very minimum, make you home more appealing to potential buyers. No matter where your property is located, projects such as adding a deck or modernizing your kitchen and bathrooms, can make your home go up in value.

Choose the Right Financing Option for Your Situation

If you’re not paying upfront for your home remodels, you’ll have to borrow money through other means. One option is a home equity line of credit (HELOC), which may have a lower interest rate than other loans, and any interest could be tax-deductible if the funds from the loan is used for home improvements. Other possibilities include traditional bank loans, credit card promotions that offer 0% APR financing, or reward programs offering cashback. If you qualify, government-backed loans, such as Fannie Mae’s HomeStyle Loan or FHA 203(k) loans often are secure and have favorable interest rates.

Some might consider moving into a new home that is already equipped with the desired amenities. This can be ideal if the cost and inconvenience of a remodel look like they will outweigh the benefits. However, with today's high interest rates on new mortgages, it may actually be more economical and have better financial results to remodel your home. You can work a large project or smaller projects spread out over time into your financial plan and spending plan to help ensure you also stay on track toward achieving your other goals. With the right planning, you can experience financial well-being while enjoying a your improved home for many years to come