If you’re approaching retirement, it’s a good time to look around your home to see if it needs renovations or updates. Even if you’re thinking of “aging in place” in your current home, some changes may be in order. You might be thinking of downsizing to a smaller home or perhaps moving closer to other family members. If that’s the case, you need to get your house ready to market—and a home equity loan may be a good way to get the funds you need to meet that goal.
There are various approaches to financing home improvement projects. Here are a few of the most common:
Credit Cards or Savings
If you’re considering small projects that are typically completed on an ongoing basis, you may decide to use savings or credit cards to cover the costs.
If you’re considering projects that are below the $35,000 threshold for a home equity loan, a personal loan might make the most sense. Discover Home Equity Loans lends between $35,000 and $150,000.
Home Equity Loan
If you’re planning larger home improvement projects, you may want to look into a home equity loan. Because you are using your home equity, the available amount is likely to be more than you could borrow with a personal loan or with your credit cards, and the interest rate is typically lower.
If you are looking for more immediate information about home equity loan options you can use our loan calculator to estimate your home’s equity, and another to help you estimate how much your monthly payments may be.
Home Equity Loan to Age in Place
Staying in your home as you get older is called “aging in place.” If you plan to “age in place,” you may want to make major renovations, such as installing a bedroom and an accessible bathroom on the main floor. Energy efficiency projects may save you money as you remain in your home on a retirement budget. Updated home features can add to cosmetic appeal as well as giving your existing home a newer feel. Updating your home can make it safer and more enjoyable, while also increasing its long term value.
Home Equity Loan for Getting Your House Ready to Market
If you want to sell your current home to downsize or move to a different location, getting your property ready to market can be a major project. Using a home equity loan to replace old and outdated features will help you get the highest possible sale price.
Renovations That Add the Most Value
Whether you plan on remaining in your home or selling and moving on you want to make sure to consider renovations that add the most value for the least amount of money. Top contenders include general cosmetic items—your front door, fresh paint and landscaping—and obviously needed repairs.
Larger remodeling projects that add the most value include the following:
An updated kitchen can help sell a house, returning 65% of what you spent on the remodel while helping your house sell faster. In 2016, the actual average cost of a major kitchen remodel was $60,000.
Adding a Bath
Adding a 6-by-8 foot bathroom with concrete walls, marble sink, with a fiberglass tub and shower had an average cost of $42,000 in 2016, and returned 56% of the cost.
Adding a deck creates an outdoor living space and enhances the visual appeal of a home. A major 16-by-20 foot deck had an average cost of $38,000, and recouped 57% of the cost.
Transforming an unfinished basement into a rec room or workout room, complete with a bar, will command a higher asking price and costs much less than adding more square footage. The average 2016 cost for this project was about $68,000, and recouped 70% of the cost.
Master Suite Addition
Adding a master suite can greatly improve you and your spouse’s life, and also appeal to couples looking for a new home if you’re trying to sell. The average 2016 cost for this was 116,000%, and recouped 64% of the cost.
It might be helpful to visit houses for sale in your neighborhood and talk to your Realtor to get an idea of what is competitive in your area, and what attributes most homes have.
Consider your long term goals for your home when planning your home improvement projects. Rank the renovations you want to complete and talk to your loan representative about using a home equity loan to finance the updates. A well-considered home equity loan could end up paying for itself—and then some!