Your home is more than just a house. It’s where you create memories with your family, entertain friends, and relax after a hard day at work. As time passes, you want your home to keep up with your changing life and style. If you’re thinking about a home improvement, here’s how to tackle it.

Perhaps you want to finish your basement to provide more privacy for your teens. A kitchen or back patio upgrade could be great for entertaining guests. Or, maybe you work from home and want to keep your “work” and “home” separate with a designated office.

Remodeling your home is an excellent way to extend the life of your house and increase its value. However, before you jump in, review the following tips to help you prepare for your home makeover.

Prioritize Your Upgrades

Some people have very long to-do lists when it comes to remodeling their homes. While it’s ambitious, oftentimes, our eyes are bigger than our wallets. If you have several major renovations you want to complete, start by prioritizing them. Put the most important one first. This step mentally prepares you in case you need to postpone some projects until more funds are available.

How do you know which home improvement is the most important? Ask yourself these questions:

• Is it an upgrade or a functional repair? If your deck is falling down or you have rotten wood, start with the deck. That’s a functional issue and a safety hazard. If you simply just want different kitchen cupboards or new appliances, but everything still works, that can wait.
• What do you use the most? If a basement remodel gives your kids the space they need and they will use it constantly, perhaps do that over something that can wait.
• Is it a need or want? This ties into the first point of it being an upgrade or a repair. For example, if your fence is broken beyond repair, you need to fix it. If your bathroom technically works but you’re just looking to update it, that’s a want.

Define Your Project

Once you prioritize your projects, begin to define the scope of your home improvement. If you plan to redo your kitchen, start by listing all the changes you want to make – ALL of them. Shoot for the moon, then narrow down the range of your project if you need to.

• What will need to be completely replaced?
• Can anything be reused or repurposed, such as appliances, countertops, or cabinets?
• Does the room need to be gutted, or are the floors still in good shape?
• Do you need to remove walls, rewire the electricity, or redo the plumbing?
• Will you need to obtain specific building permits?

The more details you can provide a contractor, the easier it is for them to give you an accurate estimate for your home improvement.

Obtain Quotes for Your Home Improvement

When you have a pretty good idea of everything your project entails, start getting quotes from licensed contractors. This step will help you determine your budget and whether you need to make adjustments to bring the price down.

• Get estimates from several contractors. This provides better figures for budgeting. Also, it can also open your eyes to new possibilities. For example, one contractor might have ideas on how you could do the project more affordably. Another might suggest different materials that could provide a desired look without the need to tear down a wall.
• Ask neighbors and friends for referrals of who they’ve used before. Word of mouth is the best advertising, especially when it comes to large projects. You can also use site like Angi, but always do as much research as you can.
• Always request an estimate on the project timeline. One company might be able to do it cheaper, but it could take twice as long. Always weigh your options between price, quality, and time.

Estimate the Potential Return

Anytime you make significant changes to your home, you want to determine whether the project will add value to your property. It’s always nice to be able to recoup your costs once you sell your house.

Not all upgrades add value, and some provide much more than others. Before you begin a major remodel, contact a local real estate agent (or two). In exchange for a nominal fee, they will typically help you estimate how much value the remodel will add to your home.

This step is especially important if you’re using a home equity loan. Being able to use your existing equity to build even more value (or equity) is a win-win.

Lock in Your Home Improvement Financing

Before you begin looking at financing options, it’s wise to revisit your budget and project estimates. As with any construction project, you want to measure twice and cut once. It’s the same with financing. You don’t want to get a loan only to discover you underestimated the cost.

Always add about 10% to your estimated project cost as a safety measure. If you come in under budget, apply the extra funds back to your loan to pay it off quicker.

Once you have your final numbers, you can begin looking at ways to pay for your project. The best financing option will largely depend on the size and scope of your project.

Smaller Projects

A home improvement loan, which is a personal loan, might be the ideal solution if your remodel is on the less expensive end. It’s flexible, and the approval process for personal loans is relatively quick.

While credit cards may be convenient, a personal loan does offer a few signature benefits:

Lower Interest Rates: Personal loans typically have lower interest rates than credit cards. That means you can put more money toward your project instead of making additional interest payments.

Easier to Budget: With a personal loan, you receive a specific amount of money. This feature helps you stay within your budget and better organize and track expenses.

Set Repayment Plan: Credit cards only require a minimum monthly payment. This amount is usually nominal and can cause you to drag out project costs for years. A personal loan has set monthly payments that help you repay it quicker and avoid long-term debt.

Larger Projects

If your remodel is going to cots you a significant amount of money, two ideal solutions are a home equity loan or a cash-out mortgage refinance.

Home Equity Loan

A home equity loan lets you tap into the equity in your property. Equity is how much of your home you actually own. It’s a popular choice for home remodels because it allows you to use your existing home equity to build even more equity in your house. As a secured loan, the interest rates are much lower than personal loans or credit cards, and the terms can extend up to 15 years or more. Between the lower interest rates and longer repayment terms, a home equity loan helps you keep your monthly payments lower.

Cash-Out Mortgage Refinance

Another option is to refinance your first mortgage and withdraw a portion of the equity at the time of closing. This option costs more upfront as you’ll encounter more extensive closing costs. However, if mortgage rates are declining, you could benefit by locking in a new, lower rate on your first mortgage. Plus, the funds withdrawn during a cash-out refinance are tied to your mortgage – providing loan terms up to 30 years. This will significantly reduce the cost of your project in terms of monthly payments.

We’re Here to Help!

Your home is your castle, and you want to care for your property as well as it cares for you. Whether you need to make repairs or want to upgrade your living space, we’re ready to help.

Our lending experts are on hand to answer all your questions. If you want to learn more about financing your home makeover, call, chat, text, or stop in! Our team is ready to help M-F, 9am-4pm ET. (315) 671-4000.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.