How is America Paying For Their Home Improvement Projects?
When you’re thinking of a renovation, what’s the first thing that springs to mind? First you think of the wonderful renovation that you could have, and then you think of what it will cost. How are Americans paying for their exterior home improvement projects? Consider these tips as you dive into a project to improve your home.
Who’s Working On Home Improvements?
If you’re thinking about a renovation, you’re not alone. Last year, over 50 percent of Americans planned a home improvement project. Improvements inside and outside the home can make your life easier and make your home more beautiful. They can also pay off when you’re selling your home. This is good news for the economy and for home improvement companies, but is it good news for those who are renovating their homes?
How Are Americans Paying for Their Projects?
A home is an investment, and homes often involve debt, usually in the form of a mortgage. However, a mortgage is not the only debt Americans are carrying when it comes to their homes and rental properties. Increasingly, people are using credit cards and personal loans to invest in projects such as new decks, exterior landscaping, or fencing. Compared to the previous year, in 2015 9% more Americans plan to put their home renovations on a credit card.
When Does It Pay to Renovate?
Unfortunately, choosing to put a home renovation on a credit card can have implications for homeowners, especially if they’re unable to pay off the balance on that card. A smaller home renovation could turn into a costly project when it’s paid off over time. Does it ever pay to take out a loan to renovate?
Sometimes renovations can reap dividends. Many younger people today choose not to buy, but to rent. This means that in some cities and towns, the rental market is hot. Even when the market is slow, interior and exterior home improvement projects could make the difference between a fast rental and one that languishes on the market for months. Looks and functionality count when you’re renting a property.
The same argument applies when you’re selling your home, but some renovations pay off more than others. For example, exterior renovations that enhance curb appeal really pay off as they give buyers a good first impression and entice them in the door. Other renovations vary in value depending on the cost of the project. If you have an eighties kitchen that’s in dire need of renovation, installing a high end kitchen may not recoup nearly as high a percentage of its cost as a medium price kitchen would. Keep renovation costs down by pursuing projects at slow times of the year.
If you’re thinking of renovating your home, you might consider taking out a loan or credit card debt to do so. If you’re simply renovating for your own ease and enjoyment, the project may still be worthwhile. However, think carefully before you decide to pursue your renovation, and make sure that it’s an investment that will pay off. If it will make your home more beautiful, easier to manage, or simpler to rent or sell, the renovation may still be a worthwhile investment.
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Written by Del Thebaud