If you are considering a home equity line of credit, or HELOC loan, to make home repairs and remodels, you are in good company. Year after year, home improvement is the #1 way homeowners use their home equity line of credit. Don’t know what a HELOC is? Watch this quick video and continue reading below.
Since a HELOC’s collateral is the equity in your home, it makes sense to put the money back into what is usually your most valuable asset.
If you live in the Denver metro area, your home value has risen, giving you a larger cushion of equity to use your HELOC for home remodeling. As a result, when you make your home more attractive to potential buyers, the payoff will be well worth the investment when you sell.
Even if you are not planning to sell for a while, you get to enjoy the value add to you and your family’s daily life from these improvements.
Which rooms and improvements deserve your attention? Thankfully, Remodeling Magazine creates an annual report revealing the costs of executing 29 remodeling projects in 99 markets nationwide as well as real estate pros’ views of how much those projects will increase a home’s value at resale. Results below are specific to Denver for 2017.
HELOC for Home Remodeling
Value Wise:
The kitchen (with a caveat.) A major kitchen remodel, averaging $50,000-$60,000, will only reap about $37,000 upon resale, whereas a minor kitchen remodel costing $20,000 will net $18,000 at resale with a ROI of 87%.
A minor kitchen model could include:
Upgrading your kitchen sink and faucet
Installing or replacing your countertops with inexpensive materials (laminate, vinyl, tile)
Adding a tile backsplash
Refacing or refinishing your cabinets
Installing stock cabinets
Upgrading your appliances
Painting your walls and ceilings
Installing energy-efficient lighting in the ceiling and under the cabinet
The Necessities:
Roof: Keep in mind the average cost of a roof depends on the materials and size of your home. However, based on Remodeling Magazine’s guidelines of removing all roofing and installation of fiberglass asphalt shingles and two skylights, you’ll spend $20,000. Upon resale you could expect your ROI to be about $13,000 for a 64% cost recoupment.
Siding: It will cost $14,500 to replace 1,250 square feet of existing siding ,of which you can expect to reap $9,737 or 67% back on your investment upon sale.
What You Want:
Besides the kitchen, bathroom remodels are also highly coveted especially if your home is older and only has one or one and a quarter baths. The good news is you can recoup a large chunk of your investment by adding another one. HGTV estimates that you can recoup 80%-130% of whatever you spend adding a bathroom.
Consider the average cost of a bathroom remodel in Denver is $18,000 and it is estimated you can recoup $11,330 or 61% of what you spent. This kind of remodel would include a new shower, free standing tub, fixtures, exhaust fan, stone countertop, two sinks, in floor heating, extending the HVAC system, and a ceramic tiled floor.
Whether you value recovering your costs, necessary repairs or enjoying your home more, RMLEFCU has home equity loan options for you.
We offer competitive, variable rates with local approval and a streamlined simple application process. Call us at (303) 458-6660 to get started.