Using a Home Equity Loan to Raise Resale Value

Using a Home Equity Loan to Raise Resale Value

You can use a home equity loan to raise the resale value of your home. When you refinance your existing mortgage, you can qualify for new financing terms, such as a higher initial payment or a lower APR. This means you can afford a larger down payment, pay off high-interest debts, or reduce the amount owed on your mortgage

Home equity loans allow homeowners to borrow against their home equity without using the equity itself or selling the house. They also give borrowers a lower interest rate than they would receive from conventional home equity borrowing, and some lenders offer a line of credit instead of a loan. Homeowners who take out home equity loans usually get cash back in the form of a check or direct deposit into a bank account within two weeks.

Home equity lines of credit (HELOC) are secured short-term loans that allow you to tap into your home’s value to fund purchases, renovations, debt consolidation, or anything else you want to finance. Unlike home equity loans, HELOCs don’t require collateral, meaning you don’t have to sell your primary residence to secure the funds. Instead, you pledge a percentage of your home’s equity as security. The lender then receives a lien on your property. If you default, you risk losing your home.

For the highest return on investment, also known as ROI, the house must be sold within one year from the time that improvements are implemented. This means an average of 64.4 percent of the capital investment being recouped according to the report from Remodeling Magazine of 30 of the most popular renovation projects.

This is a difficult situation to find yourself in as a homeowner who wants to sell their house as opposed to someone who wishes to live in the new home they’ve crafted. If they decide to take out an equity loan for their home,

Here are a few of the top renovation ideas to increase the returns on investment. All dependent on the possibility of selling the house within a year:

Attic into a bedroom

Making an attic into a bedroom yielded an ROI of 83 percent. On average, this change raised the value of a house by $39,000. The largest expenses are the addition of bathrooms, as well as strengthening the floor, and adding insulation and finishing to the space.

Simply adding insulation to the attic, which has a national average of $1,268, results in a cost of 116 percent recovered.

Kitchen Remodel

An ROI of 85 percent. Projects that are budgeted for 6-10 percent of the home’s value will yield the greatest return. The most sought-after items to be replaced in kitchen remodeling included countertops (74 percent) as well as wallpaper and paint (70 percent) cabinets (67 percent) as well as flooring (64 percent).

Kitchen remodeling is the second most requested project, accounting for 70 percent, and the typical kitchen remodels cost $56,768. A minor kitchen renovation, however, has a higher return with an average cost of $20,142, and 83 percent is recovered.

The kitchens of today are usually outdated in terms of technology, accessories, design schemes, and layout, according to Reagan Toal, marketing manager for Federal Brace, which sells countertops with supports. The kitchen can be quite uncomfortable due to poor patterns of movement and more equipment.

“Expanding the kitchen, creating an open floor plan, or simply reevaluating the current structures to create a more expansive feel can not only increase the homeowners’ enjoyment of their kitchen, one of the areas of the home most people spend immense amounts of time in while sentient,” however, it could also boost the value of their home’s sale, Toal also added.

New doors

101 percent ROI on an all-new metal front door as per Northshore Fireplace. The company recommends that the front door complements the style of the house and doesn’t get too extravagant, or else the ROI will rise.

This is higher than the 91% return on investment Remodeling Magazine found for a steel door costing $1,335 in 2016 or the ROI of 82 percent for a fiberglass entryway that cost $3126.

The replacement of a garage door is a good investment at 91 percent with an investment of $1,652 as per Remodeling Magazine.

Replacement for the siding

A return of 80 percent for vinyl siding, as per Northshore Fireplace’s figures. For fiber cement siding the ROI is 84 percent and foam-backed vinyl offers 77 % ROI as per 2015 data.

Estimates are 1250 sq feet for siding including factory trim on every opening and corner.

Remodeling Magazine had slightly lower results in 2016 with 78 percent of the market going to engineered siding replacement and the vinyl industry had 73 percent.

Bathroom Remodel

A 65-percent ROI. The average bathroom renovation within the U.S. costs $17,908. This is the most frequent remodel job that’s requested.

A bathroom renovation of the mid-range is $42,233 and yields 56 percent.

In general, a bathroom remodel doesn’t have a particularly profitable investment, however, it is the most frequently requested remodeling demanded in the nation. It’s possible to consider it one of the most expensive projects for home improvement.


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