Property values are on the rebound and for many homeowners, the bump in home equity has made the possibility of refinancing a reality. Refinancing your mortgage at a lower rate can save you thousands of dollars in the long run and the increase in equity can also mean a big payoff if you ever decide to sell. Spending a few dollars on some basic home improvement projects can make your home more appealing to prospective buyers and maximize your value when it’s time to refinance.
Increase Your Square Footage
Adding on another room to your home can give your equity value a significant boost while increasing the size of your living space. Before you build an addition, it’s important to give some thought to what the new space will be used for to make sure you’re getting the biggest return on your investment. For example, adding on an extra bedroom may be your best bet if yours is the only two-bedroom house in a neighborhood full of three- and four-bedroom homes.
If you’ve already got plenty of bedrooms, building another bathroom can give your home’s value a boost and make your family’s morning routine a little easier. Expanding the kitchen or constructing a new home office increases your square footage and adds functionality. Just keep in mind that whatever type of space you choose needs to be able to translate to potential buyers if you decide to put the house on the market.
Give Your Garage a Makeover
Having a garage is already a big value booster but making improvements to an existing structure can give you even more bang for your buck. Some of the projects you might consider tackling include expanding a single-car garage to make room for two vehicles, creating a dedicated workspace, installing cabinets or shelves for organization or redesigning the space to give it a completely different function. For example, transforming a garage into a man cave or playroom for children could equal big bucks at appraisal time.
If you don’t have a garage but a majority of the homes in your neighborhood do, it might be worthwhile to think about building one. Constructing a garage is a big project that can take up a lot of time and money so it’s a good idea to check out home values in your area before you decide to take it on. You don’t want to push your home too far outside the range of comparable values, since that could actually work against you when you refinance or try to sell.
Take the Indoors Outside
Expanding your lot can mean a big jump in value but it’s not always possible to get the extra space. If you’re not able to increase your square footage outside, the next best thing is to make the most of the space you do have. Outdoor living spaces are extremely popular and they generally aren’t as time-consuming and costly as additions or remodels.
The types of outdoor “rooms” you can create are virtually limitless and it all boils down to how you plan to use the space. For example, if you like to entertain you might consider building an outdoor kitchen, complete with a fire pit and bench seating. If you have young children, setting up a designated play area can add value to your home and potentially be a major selling point down the road. Even something as simple adding on a deck or patio, installing a fence or sprucing up the landscaping can sway the numbers in your favor when it’s time to refinance.
Things to Remember
When you’re getting your house ready to refinance, it’s important to keep in mind what the appraiser is looking for. The number one thing that’s going to add value to your home is increasing the size of your property. This includes your overall square footage, the size of your lot and the number of rooms your house has. When you’re refinancing, the old adage of “less is more” doesn’t apply.
The appraiser will also be looking at the overall condition of your home to make sure there are no major structural defects or damage. Making sure that things like the roof, the foundation, windows, electrical systems and plumbing are all in good working order is essential to getting the best appraisal possible.
Finally, you want to make sure that the appraiser takes notice of any improvements you’ve made. Generally, appraisals are less about cosmetics than structure so you should have a list ready of all the upgrades you’ve done to make sure you get the credit you deserve.
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