Kitchens are an important part of any home, but if you’re thinking about selling, an attractive, functional kitchen is essential. “Right now, people are trying to modernize their homes and also make their dwellings sale ready in case they decide to go down that road,” says Josh Fetting, consumer lending sales manager with UW Credit Union.
If your kitchen could use a facelift, here are some tips on getting it done.
Scale and Scope
“A kitchen is going to be one of the biggest bangs for your buck as far as remodels go,” says Josh. “It’s an extremely visible and well-used part of the house, and it’s a place where there are a lot of little features that you can add and improve upon. You have countertops, cabinets, appliances, flooring—all sorts of things that add a lot of value.”
It’s typical for midrange kitchen upgrades to touch on all of these items, according to Remodeling magazine. Upscale projects can feature higher-quality finishes, including custom cabinetry, stone countertops, the latest high-end appliances, and upgraded lighting, all of which can add to the total cost of the project.
Remodeling’s Cost vs. Value Report, which compares the average costs for remodeling projects with the value they retain in the housing market, places the average local cost of kitchen remodels between $26,000 and $150,000, depending on the scope. A portion of those costs can be recouped in the sale price of your home.
Renovating a kitchen could provide greater ROI than upgrades to other areas of the home. “For kitchens, you end up getting a lot closer to dollar-for-dollar, which is everyone’s goal: to maximize their investment in the home,” says Josh. “What you want is for things to match up. You don’t want very old, failing cabinets with a brand-new countertop because, more than likely, you’re going to have to redo the cabinets anyway. Sometimes it makes sense to just do it all at once.”
Right-Size the Project
Kitchen remodels can certainly be a worthwhile investment, but don’t bite off more than you can chew. “It’s unlikely that with a couple of projects you’re going to double the value of your home,” says Josh. “You could have large impacts, but it’s important to be realistic about what the costs are, as everything from materials to labor has increased.”
One way to be sure that you’re maximizing your ROI is to research other homes in your neighborhood. “Is your neighborhood the kind that has mostly granite countertops in the homes?” asks Josh. “Or would a nicer laminate countertop be appropriate? Overdoing it could backfire if your remodel is too luxurious for your neighborhood.” Conducting that kind of research can help you determine whether a kitchen renovation is worth pursuing. An upgraded kitchen can make your home more attractive to potential buyers and help you sell your property quickly.
Similarly, researching your neighborhood can help you to set a budget for your kitchen renovation. If, for instance, you notice that similar homes in your neighborhood with updated kitchens are selling for a higher price than those without, you can use that difference as a ballpark figure for your budget.
Picking the Right Lending Product
Once again, the scale of your kitchen remodel comes into play when considering how to fund the project. If you’re planning to do much of the work yourself or only tackle a small kitchen improvement, a personal loan or even a credit card might be enough to suit your needs. However, for most kitchen remodels, a home equity line of credit (HELOC) is probably most appropriate. This lending vehicle leverages your home’s equity and allows for more flexibility that other lending products lack. HELOCs offer the ability to pay for a project in stages, which can come in handy when working with contractors.
“HELOCs help you finance a larger project over time,” says Josh. “If you’re hiring someone for a large remodel, you’re most likely putting down a deposit and paying the rest upon completion. Even if you’re doing it yourself, you’re not generally buying all the materials at once.”
Additionally, HELOCs can help you absorb additional costs if the project ends up over budget. “A HELOC allows you to tailor it and build a little cushion into your budget and have extra when you need it,” says Josh. “And if you don’t need it, you don’t have to use it.”
Jason Scott writes about financial wellness for UW Credit Union, a not-for-profit financial institution that offers home-equity products, mortgages, auto loans, and more.
UW Credit Union
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Madison, WI 53705