Home improvement is an area of homeownership that involves upgrading or improving the structure and fixtures within a home. The goal of these renovations is to increase the value of the property and make it more desirable to potential buyers in the future. Many people choose to complete these projects themselves, while others hire contractors with years of experience in the industry.
According to the Consumer Financial Protection Bureau, the number of Americans who hired a contractor for a home improvement project in 2017 increased more than 50 percent over the previous decade. One of the reasons for this increase is the low cost of materials, as well as rock-bottom interest rates that have made mortgages more affordable.
A good rule of thumb to follow when deciding on what improvements will increase your home’s value is to add things that are functional or useful. For example, adding another bedroom to a home will increase its overall resale value, while installing a new kitchen is more likely to be appreciated by a future buyer than an overly personalized bathroom remodel that may look out of style in 20 years.
Depending on your financial situation, it is wise to consider the best way to finance your home improvement projects. If you have a solid credit score and minimal equity built up in your home, then a personal loan may be the right option. Alternatively, if you have already built up substantial equity in your home, then a cash-out refinance or home equity loan may be better for you.