Ready to Remodel? What to Consider Before You Begin

paint and tile swatches

With many of us having spent more time at home over the past two years, its no wonder homeowners are investing in upgrades. Perhaps youve noticed more contractor vehicles in your neighborhood or spoken to your neighbors about the work theyre doing on their homes. Whether upgrading to make better use of their space or preparing to put their home on the market, many homeowners are taking on remodeling projects.

People choose to remodel for a variety of reasons, some of which may have been clarified over the course of the pandemic. Perhaps your work situation has changed, and youve recognized that you need a home office. Or maybe youve decided your current home is no longer fulfilling your needs, and youre interested in a remodel to boost its resale value. Whatever the case, determining why you want to remodel will help you decide what to remodel, as well as how to go about it.

A key consideration with remodeling decisions is return on investment (ROI). Any upgrade will bring some return, but the amount will vary based on the project. HomeAdvisor suggests that homeowners can recoup up to 75 percent of the money they put into a basement remodeling project, while Remodeling magazines Cost vs. Value report indicates that bathroom upgrades can net between 50 and 64 percent, depending on scale and scope.

If you plan on moving or selling your home in the near future, smaller updates instead of a major renovation may be smarter, says Josh Fetting, commercial lending sales manager with UW Credit Union. Smaller updates can include things such as fresh paint or new fixtures, which you may be able to do yourself. Larger updates get more expensive, more complicated, and could require the help of a contractor with expertise.

One of the best ways to start is to consider what look and functionality you would like, says Josh. Then make a few trips to the hardware store to get an idea of what costs may be for materials and appliances. Once you have these basic ideas, youll need to determine if youre able to take on that work yourself or if youll need a contractor.”

Given the current landscape, numerous factors could influence how quickly youre able to get your project finished. Weve been hearing that projects are taking longer than normal due to the number of people doing remodels, worker shortages, and limited stock of materials, says Josh. Many people are planning remodels earlier than normal to get a jump start.

Certain remodeling projects may require portions of your home to be effectively shut down for a period of time, and in this environment, your project may take longer than you thinkespecially if you need to get on contractors schedules. Its best to have a plan in mind for these eventualities so you can be prepared when and if they come up.

Once youve worked out the details of your project and have some idea of what it might cost, its time to decide how to pay for it. Depending on the size of your project, it may be possible to pay for it with a personal loan or even a credit card; however, for most home renovation projects, Josh recommends a home equity line of credit (HELOC) to get the job done.

While personal loans and credit cards can be great in the right context, for large-scale projects, HELOCs typically provide better interest rates. In addition, HELOCs offer flexibility that other lending products cant match.

A HELOC is usually the best loan type for a major home remodel, says Josh. The HELOC allows you to draw funds when you need them and helps you avoid paying interest on funds that you dont need yet. It can also give you a cushion for any overages that you may have with a large project, like a kitchen remodel.

Every remodeling project cant be done year-round, but theres never a bad time to start thinking about a remodel. Take that first step today so youre ready when its time to get to work.

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
3500 University Avenue
Madison, WI 53705