It’s one of the most exciting moments of your life–your first morning in a home of your own. Unpacked boxes are piled up in the corner, and you’re not quite sure where your slippers ended up. But it’s all yours, and that alone puts a big smile on your face.
You fumble for the light switch, only to realize that it’s quite a bit lower on the wall than you expected. Then, you make your way to the master bathroom.
You knew it was a bit small when you bought the place, but you figured you wouldn’t spend a lot of time in there anyway. In the morning light, though, those dusty rose walls and undersized toilet are putting a dent in your homeowner happiness.
A few years pass—you get married, perhaps add a child to the family, and turn that sweet little patio in the back into a family barbecue hotspot complete with a smart lighting and speakers.
But that tiny bathroom has turned into more than an annoyance. Your water bills are creeping up due to leaky faucets, you don’t have anywhere to plug in your hairdryer, and lead paint is chipping into the teeny tiny tub.
It’s clear–it’s time to make a change.
You have some choices to make. Will you renovate, restore, or remodel? Next, who will do it? Just you, a contractor, a design-build general contractor, or another option? Finally, you'll need to figure out how to pay for it—cash up front, a second mortgage, or a home loan refinance?
Let's dive in.
Home renovation jargon
First, let’s define some terminology. When you use the same lingo as your contractor, you’ll have a much greater chance of getting the outcome you want.
Renovation: a project that makes a space like new—things like replacing cabinets and lighting in a kitchen or putting in new faucets and a backsplash in a bathroom.
Remodel: a construction project that creates something new. It could entail knocking out walls or reconfiguring the kitchen so the cabinets and countertops form a new shape.
Restoration: a project that returns a home or item to exactly how it once was. This could mean refinishing a 150-year old dining room table, for example, or replacing hardwood flooring to exactly match its initial appearance (probably not your favorite option for that pink bathroom, but we won’t judge).
Retrofit: a project that adds something to a property that wasn’t there originally, especially structural upgrades to make your home safer from natural disasters such as floods or earthquakes.
Each of these project types require cash, and home financing options may be available. Be aware that costs vary widely according to local market conditions, and that it's a good idea to connect with an expert as you explore your options.
Contractors
Choosing the right professionals is key to the success of your project, and being careful upfront can save a lot of time, frustration, and money in the long run. Let's cover some jargon for the people who do the work.
General contractor: The person or company responsible for day-to-day oversight of the construction, including managing specialty contractors and communicating with everyone on the job site. This term is generally interchangeable with the title Builder.
Architect/designer: This profession can include everything from planning cabinet layout to full-scale architecture. Your design team and builder may have a pre-existing relationship, or you can build your own team.
Design-build contractor: Also known as a master builder, this special type of general contractor acts as both the designer and builder for remodeling projects. This means one person handles everything from the initial design to major construction to final changes.
Specialty contractor: A contractor licensed in only one area, such as plumbing, electrical work, or concrete.
DIY: Doing it all yourself may make sense if your project is small, you have some basic experience, and you have the time to learn along the way. If you choose this option, ensure you have the proper permits and that the work is safe and up to code.
Benefits of updating your home
Your home is your primary investment and a safe haven from the world, but it’s more than just a place to lay your head. It’s a place where you build a life of your own—it's an extension of yourself.
Personal preference
Creating a space that meets your needs is one of the most common reasons to update your home, and for good reason. Common personal preference remodels include adding hot tubs, wine cellars, game rooms, and unique outdoor spaces.
Benefit: You get to live in a home designed to your exact specifications, no matter how unusual. Entertaining becomes an art form, and your home is a wonderful expression of your personality.
Curb appeal
A similar remodeling category known as curb appeal often refers to exterior improvements—think new siding and paint or upgraded landscaping in the front yard.
Benefit: Potential buyers love your home at first glance and are eager to see inside.
The basics
You may also be considering a remodel to increase your home’s value more directly. This may make sense to increase equity, improve resale value, or both. Some of the best remodeling investments in this category have to do with functionality and are known as the basics.
If you have a leaky roof or dysfunctional gutters and downspouts, fixing them could make a big difference. The same goes for leaks, unreliable heating and AC, or problems with flooring, interior walls, and retaining walls. Updating electric work (such as adding safe outlets for hairdryers and updating light switches) would fit into this category, too.
Benefit: Your home is safe and modern, making it more livable and comfortable. These renovations may also make your home easier to sell to buyers seeking government-backed loans.
Value add
In between functionality and personal preference is a category referred to as value add. These projects may include kitchen and bathroom upgrades, new appliances, energy efficiency improvements, and new windows. If you were to dramatically upgrade that pink bathroom, for example, it would probably fit into this category.
Benefit: Updated kitchens, bathrooms, and windows can be the best return on investment when it comes to selling your home or re-evaluating your equity for a rate and term refinance.
Remodels to consider carefully
Other upgrades should only be on your list if they will greatly improve your quality of life and you’re not planning on selling soon. These projects, such as converting a garage into a bedroom, knocking out walls to eliminate a bedroom, or refinishing a basement, may reduce value from an appraisal standpoint.
Homeowners also need to be careful about potentially over-improving a property. Things like adding a pool or sunroom when it’s the only one on the block could make the property harder to sell. Adding an extra story in a neighborhood of single-story homes or doubling square footage with an extension could also be risky.
Think about it this way: No one wants to pay $400,000 for a home in a $200,000 neighborhood. Similarly, most buyers won’t want a two-bedroom house in a family neighborhood, and won’t want to park on the street if all their neighbors have a secure spot in the garage.
Renovation home loans
A home renovation is a big decision whether you’re making structural repairs, upgrading that pink bathroom, or hankering for more of life’s luxuries.
Many home loan products are available that could help. Some are specifically for energy improvements, and others may offer a revolving line of credit so you can cover expenses as needed.
If you’re considering a change, a qualified Loan Officer can help you explore your options.
