Renovations soar during COVID-19 home value boom

We’ve heard over and over about how home values have jumped 10, 15, and even 20% in the last 12 months. Yet many have decided to stay put during this tumultuous time.

So, if an owner decides to stay put and renovate instead of selling, what are their options?

FOX 5 real estate expert John Adams says home renovations make sense to lots of folks because they like the house they are in, they like the neighborhood, and they see that they can increase their home enjoyment (and maybe value) by making improvements as opposed to selling in today's marketplace.

Selling and then moving is an expensive and complicated and emotionally disconcerting process, and a lot of folks are very uncomfortable with the entire process.  

In today’s market, the reality is that most owners are waking up to find that their homes are worth a lot more than that same home was worth just a couple of years ago.

As a result, owners have options today they may have never had before.

A recent study has shown that home renovation budgets have grown 15% to a median of $15,000, just over the past year, with kitchens, outdoor spaces, and home offices receiving the most attention.

Many owners are deciding to undertake home improvements in order to:

1.  Add an inlaw-suite to the basement

2.  Convert unfinished basement or attic space into a home office

3.  Make needed major repairs (roof, HVAC)

4.  Upgrade aging kitchen/bath areas for personal use

5.  Consolidate finances/credit cards/travel/etc

In order to pay for the renovation homeowners want, there are three major options:

1. Cash

Paying in cash means you can afford the purchases you’re making without having to fret over paying back high-interest debt

2.  Cash-out refinance 

This is a relatively major financial transaction involving an assessment of the value of your home, an assessment of your credit, and an analysis of your ability to repay the amount you are hoping to borrow.

One of the great benefits of refinancing is that you are able to lock in a long-term fixed interest rate, often at very competitive rates.

3. Home Equity Lines of Credit (HELOCs)

A HELOC is a line of credit secured by your home that gives you a revolving credit line to use for large remodeling projects. The HELOC offers a great deal of flexibility related to how you borrow and repay the money.  However, the interest rate is often variable and may go higher at any time.

The bottom line is that one of the options available to many owners today is the opportunity to tap into a newly found amount of value that shows itself as increased home equity.

If you decide you want to stay in your home in the future, it’s smart to consider the opportunity you may have to renovate or improve your current home to allow you to use and enjoy it for years to come.

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