Making monthly mortgage payments is a great way to build your home equity, but it’s an awfully slow one. Another way to gain equity is by adding value to your home. As the home value goes up, so does your equity and doing complete renovations or remodels is one of the best ways to add value. But many homeowners go into home projects thinking it’s going to pay off hugely in the long run, only to end up spending too much on the project and seeing it cost them just as much. But which ones will give you the most equity, dollar for dollar?
Many homeowners think that it’s the bathroom and the kitchen that will most increase the value of their home, and they’re not entirely wrong. Just about any kind of kitchen renovation will add value and equity to the home, but it does work a bit differently with bathrooms. While many are tempted to think that it will pay off more for them to rip out their bathroom entirely and replace everything in it, that’s not actually the case. In fact, doing a basic remodel will pay off more in the long run, dollar for dollar, than a high-end one. And when it comes to the question of remodel or renovate bathrooms, you’ll always get more home equity for your dollar by renovating and improving, rather than remodeling and replacing.
Aside from kitchens and bathrooms, another home improvement that adds a great deal of home equity is replacing exterior doors with steel doors. Steel doors not only add to the idea of security in the home, but they also are simply nicer to look at. Replacing an entry door in the average home for $ 1,200 has an approximate return on your investment (in the form of home equity) of 2%. Replacing a garage door also adds a lot of value to a home, and is especially important when the homeowners are trying to improve the curb appeal of their home.
Other home improvements that will add the most home equity without you overspending on them are replacing windows and siding, turning attic space into a spare bedroom, and finishing basements. Some of the home improvement projects that will give you the worst return on your dollar are sunroom, home office, and hot tub additions.
Another innovative way to improve the value of your home without spending too much while doing it, all adding to your home equity, is to do some of the work yourself. You may not be able to replace wiring, but you can tear down the drywall in front of it so that it’s ready for an electrician to take over. And while you might not feel confident replacing a roof yourself, you could tear off the old shingles and get it as prepared as you can before a contractor takes over. For smaller projects, you really might be able to do it all yourself and save yourself even more, keeping even more of that value, and equity, for yourself.
Bryan J is the author of this article. For more information about Home equity loans and Home equity line of credit please visit canadianmortgagesinc.ca.