You should use home equity to pay for projects

While low interest rates spurred many to buy homes during the pandemic, the frenzy ended in early 2022. Now, we’re seeing more homeowners sitting on the sidelines as average mortgage rates fluctuate between 6% and 7%. However, increased demand has driven home prices through the roof, leaving many homeowners with more equity.

If you’re wondering how to tap into that equity in your current home to get the most out of it, a Home equity loan or HELOC may be helpful. These types of loans usually offer low interest rates and large loan amounts. Also, if you invest in home improvements, you may be able to Stop being interested.

But which home upgrades are best for increasing the value of your home? Below, we list eight projects that you should consider using home equity to pay for. Start exploring your home equity loan options here now to see if you qualify.

Using home equity to pay for 8 projects

The following eight home improvement projects give the biggest boost to home values.

1. Putting on a new roof

Is your roof nearing the end of its lifespan or showing signs of failure? If so, replacing it could be a big value booster.

According to the 2022 Remodeling Impact Report National Association of Realtors (NAR), offering 100% cost recovery for roof replacement. They can also help entice potential buyers because they won’t have to worry about the roof for decades.

“One of the best home improvements to increase home value is making sure a home’s shell is waterproof and energy efficient. This translates to a new roof, double-pane glass windows, and installing insulation inside the walls,” says Monica Zasada, a DE-MAZING- This home construction and renovation specialist.

2. Updating the HVAC system

HVAC units have a typical lifespan of 15 to 20 years, but many units that are only 10 years old lack the energy-efficient technologies available today. According to the NAR report, updating an HVAC system results in a 103.5% cost recovery.

3. Renovate the kitchen

While renovating a kitchen doesn’t offer the highest cost recovery rate (67% according to NAR), it can be the selling point that directs buyers to your home.

“Renovating kitchens and bathrooms can be expensive but if done right, it adds a lot of value to the home,” says Pratik Pathapati, owner of Rework Cash Offers, a real estate investment firm. “Homes with remodeled kitchens and bathrooms tend to sell quickly with multiple offers,” he added.

Explore your home equity loan options to learn more.

4. Renovate the bathroom

As mentioned above, kitchen and bathroom are both very important to home buyers. The NAR report states that bathroom renovations offer a 71% cost recovery, but they can greatly enhance your home experience and win over buyers.

5. Garage door replacement

You may not think much about replacing your garage door, but it’s a home improvement project with one of the highest cost recovery rates.

2023 Cost vs. Price Report of Remodeling found that homeowners who replaced their garage doors recovered an average of 102.3% of the cost. NAR also reports a 100% cost recovery rate.

“First impressions are important, and improving a home’s curb appeal can make a significant difference in its value. Focus on landscaping, exterior painting, replacing the front door, updating the garage door, and enhancing the overall look of the property,” says Troy Robillard, Realtor with Premier Plus Realty. , co.

6. Adding/refinishing hardwood floors

Hardwood floors, whether new or refinished, offer the highest cost recovery percentages in both surveys we reviewed. Going the refinishing route offers the highest cost recovery rate of 147% according to NAR, while new floors offer rates of 118%.

“If the floors in your property are worn out, you should redo them first. In this case, hardwood floors fetch higher returns in the market because they are durable and in demand in the market lately,” explains Sal. Dimicelli, Sr., owns Lake Geneva Area Realty.

7. Upgrading insulation

As Jasada mentioned above, adding insulation to a home’s walls can be a worthwhile investment. New or added insulation helps keep your home cooler in the summer and warmer in the winter, reducing energy costs. NAR’s study supports the recommendation, reporting that insulation upgrades offer 100% cost recovery.

8. Manufactured stone veneer

Finally, adding stone veneer to your home’s exterior can be a helpful way to increase the value of your home. Studies of remodeling have shown it offers a 102.3% cost recovery.

“Stone veneer is a fantastic option,” says John Hogan, an exterior remodeling contractor and president of Blue Nails LLC. “It’s a high-ticket item, so we recommend it for covering foundations and using it on accent walls,” she explains.

The right home improvement project for you will depend on your priorities, budget and the unique needs of your home. However, these eight are at the top of the list to increase the value of your home. Plus, whether you use one HELOC or a home equity loanAs long as the funds are used to buy, build or significantly improve your home — interest can be deducted.

Learn more about your home equity options — and how to pay for one (or more) of these plans — now here.