Whether you want to sell your house or simply enjoy it more, home improvement projects can add value and make your living space more comfortable. But before you break out the power tools, it’s important to weigh the benefits and costs of your project and to think carefully about how you will pay for it.
Many homeowners have taken advantage of the pandemic to upgrade their houses. In fact, the National Association of Realtors (NAR) released a 2022 Remodeling Impact Report showing that renovations increased homeowner satisfaction during and after the lockdown. But there are some improvements that you should not pursue if you’re planning on selling your home in the future.
For instance, adding an in-ground pool may not pay off if other homes in your neighborhood have above-ground pools. It’s also a bad idea to overspend or go into debt on your project, which could put you at a disadvantage if you need to sell your home.
The best way to avoid a home improvement debt trap is to save cash or take out a mortgage with a lower interest rate before you start a project. If you do decide to finance a renovation, factor in the monthly payment into your budget. Personal loans and credit cards can be used for small to medium projects, while home equity loans or lines of credit are appropriate for larger renovations. Be sure to work with a financial planner to determine how you can afford the loan payments.