Home Renovations

Key Takeaways

  • Doing a home renovation can be a big project, both in terms of time and money.
  • There are different ways to finance renovations.
  • Give consideration to how much longer you plan to live in your home before you renovate.


Are you a homeowner who is itching to update your home? Tired of shag carpeting? Can’t stand the layout of an old kitchen? Or does that dated paint palette just really need to go? Well, if you’re thinking about renovating your home, there are some things to consider.

The money is usually the biggest factor. Perhaps you’ve been saving up and you’ve got enough set aside for your project (including enough for any unexpected surprises, which are common, especially in older homes). If so, that’s great – no financing needed!

For most people, however, the money is going to need to come from financing. You’ll want to be mindful of how you go about this. You may be able to get a home equity line of credit. In effect, this is a mortgage on top of your existing mortgage. To receive one, you can’t go above 80% of your loan-to-value.

Another option is to refinance your current mortgage and do a cash out. As an example, if your current mortgage balance is $180,000 and you need $50,000 for your renovations, you can apply to refinance for a new mortgage of $230,000. You’ll receive the $50,000 after closing on your new mortgage.

One important aspect of remodeling your home is thinking about what kind of return you’re going to get on the money you put into the work. There are some things that will give you a better return than others. If you’re replacing shag carpeting from the ‘70s, then you’ll add value to your home, but you won’t get 100% of that cost when you go to sell. There are some things that are simply considered basic upkeep – cosmetic changes such as new paint, where you won’t necessarily get your money back. However, if you renovate your kitchen or a bathroom, modernizing these rooms and making them more attractive to future buyers, you’ll see a bigger return.

The bottom line is that you’ll probably want to continue living in your home for at least five years after you renovate – otherwise you won’t get your money back on those costs. Going back to that $50,000 renovation cost, amortize it over five years to see if it’s worth it – you’ll find that it probably is.

Of course, there are both financial and non-financial considerations beyond how to pay for a renovation. For instance, you might decide that $50,000 would be better put to use in your retirement account. On the non-financial side, you may work from home and really want your space to be updated because you’re spending a lot of time looking at it.

As you can see, there are a lot of aspects to take into consideration when you remodel a home. Just make sure to go into it with your eyes wide open – it’ll help keep you from making serious mistakes along the way. Until next time, enjoy.


If you’d like to read more on this topic, here are a few of Gary’s previous posts that you might enjoy:

Avoiding Homebuyers Regret

5 Money Changes When Buying a Home

Gary has provided wealth management services to clients for over 30 years. He is credentialed in financial services with practical experience in all areas of finances and money. He is the author of Changing the Conversation, Wealth of Everything, and co-author of The Business Battlefield.

He is genuinely interested in getting to know the person in front of him. Who are they? What’s most important to them? Where do they want to go in life? Whether he’s advising clients, mentoring his team, or coaching entrepreneurs, Gary is always simplifying complexity and motivating others to take the next action that’s right for them.

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