What Should You Know Before Applying for a Home Improvement Loan?
When deciding how to pay for home renovation projects, you might consider the loan's cost and what design features you want to add. However, preparing for a renovation involves taking several other steps that can help you make wise decisions about the best way to pay for your home remodel.
Consider these guidelines before obtaining basement finishing financing, a bathroom remodel loan or any other home addition loans:
1. Check Your Home's Value
Determining your home's current market value helps you see the bigger picture before setting out on a renovation project. If you're looking to sell after you renovate, have an appraiser complete a home inspection to determine its value and find potential issues before you begin renovating. For example, serious foundation issues might take priority over a master bedroom redesign.
2. Remodel to Add Value
Whether or not you plan on selling, it's always a good idea to remodel for added value. Research which renovations are most likely to bring you a better return on investment. Check online listings or consult your real estate agent to get the most bang for your buck. Some of the best renovations for increasing your home's value include:
- Boosting your home's curb appeal with paint or landscaping.
- Remodeling your kitchen with an island or larger pantry.
- Adding livable square footage with a finished basement or additional room.
- Building or converting a home office.
3. Determine Your Renovation Budget
Deciding how much money you actually need to complete your renovation is an essential step in applying for a home improvement loan. Once you've been approved, you certainly want to stick to your budget.
Start narrowing down a budget by determining your home's value and which renovations would likely increase its market price. Once you know your renovation goals — whether to increase your home's value, improve structural and safety issues or make the space more enjoyable for your family — you can decide on a budget that fits your needs.
4. Decide on DIY or Pro
As fewer homeowners work with general contractors on their remodels, more people complete home renovation projects by themselves. Going the DIY route can save you hundreds of dollars on projects, but it's costly to fix a botched DIY job — especially structural, electrical or plumbing work.
Choosing to DIY your renovation might be your best move if:
- The project is small and simple enough for you to learn quickly.
- You want completion, not perfection.
- You have the patience to give the project time.
Working with a professional involves labor costs that could make your remodel significantly more expensive. If you decide to hire a professional contractor, ask around for several project timelines and cost estimates. A professional might save you money if:
- A mistake in the project would be unsafe or costly.
- You're planning to sell your home.
- The renovations require special permits or need a strict timeline.
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