Three Questions to Ask Yourself Before You Spend Your Cash on Home Improvements
Whether you just moved into your new home, have lived there for years, or own investment properties, every homeowner always has a to do list of updates or repairs they want to do around the house. Improvements can pile up and become daunting tasks over time. Prioritizing your home improvements becomes a must, making sure the most important ones get done first. Before shelling out the cash on any home improvement, ask yourself three easy questions Ralph DiBugnara came up with to make sure you are on the right track and the home improvements are worth the money.
1. Does the home improvement add value?
Your home is most likely the biggest investment of your life, so make sure you treat it that way! Home improvements to kitchens, bathrooms, as well additional closets are all great long term adds to your investment. Heat and electric bills rise with old windows and are responsible for roughly 25% -30% of residential cooling and heating energy use. Replacing old windows with new, energy efficient windows, that will decrease expenses in the long run is also a great investment. If you are renting your home and or bedrooms in your home adding another bedroom is a great addition to income by adding to what is rentable. For more quick and easy improvements that give you the most bang for your buck, check out this video.
2. Is the home improvement worth it?
Going broke to make your house better doesn’t benefit anyone! Whatever you are going to spend on your home improvements, it is important as an investment that you recoup that cost in 3-5 years. If you are going to spend $30,000, but you are adding $700 a month to property income or decreasing expenses by $700 a month than you can recoup the $30,000 in less than 4 years.
3. Is there financing to fund this home improvement?
For Home improvements, a great option is a home equity loan. You are going to need about 20% equity in your home for this and they almost act as a credit card on your home. Meaning you only pay on the money you borrow, and you can leave credit available on it and take money on and off the line as you need it. There are also construction loans available to finance a bigger project at competitive rates in this low rate environment.