A home is so much more than a place to live. For most people, it is the most significant investment alongside a carefully managed 401(k) portfolio. Homeownership represents the realization of the American Dream. Currently, around two-thirds (65% – 66% to be precise) of Americans own their own home – a testament to hard work and strategic planning. Given the significance of this investment, it makes sense that thoughtful home improvements support long-term living comfort. This is evident in how homeowners design, renovate, remodel, and improve their homes to ensure they meet their long-term expectations.
The notion of a thoughtful home improvement requires elaboration. Many renovations are geared toward customizing a home to the owner’s expectations, and/or to regulatory requirements. These tend to shift over time, especially for long-term homeownership. Depending on personal needs, a home improvement could entail uniformity across floor spaces, with smooth, seamless transitions, nonslip tiles, and wider hallways, walkways, and entryways. Other examples include raising or lowering tabletop counters, drawers, and utilities to ensure that they’re easy to use and accessible for aging in place, disabled persons, guests, or tenants.
Beyond the basics, many other remodeling ideas support long-term living comfort. Consider the merits of walk-in bathtubs, safety nets on swimming pools, restored outside wooden decks, refinished patios, upgraded lanais, and built-in grill areas. Each remodeling initiative is designed with a purpose in mind – that being the betterment of the property for enhanced utility value. For example, a standard shingle roof has a lifespan of 15 to 20 years. But, a metal roof offers superior quality, a lifespan of 50+ years, and lower long-term maintenance costs for the homeowner. Plus, it adds value to the property for the next homeowner at resale. Often, the upfront cost of adding value now is made up for over the long term. Plus, there may be fewer headaches to contend with down the line.
How Are Homeowners Managing the Costs of Renovations?
First of all, there is a difference in purpose between what a homeowner does with a short-term investment and a long-term investment. With a homestead in place (the homeowner’s primary residence), there is often a more personal relationship between the homeowner and the property. Everything is geared toward the homeowner’s and/or family’s needs and preferences. These homes tend to receive substantial investment across all aspects of home improvement. Properties that are flipped tend to undergo cosmetic changes designed to wow buyers. Rental properties tend to be improved for utility purposes, since there is often a high turnover of residents from lease to lease.
Not everybody has deep pockets for remodeling projects. Homeowners often tap lines of credit for renovations. The easiest way to access the capital needed to remodel homes is through refinancing options such as HELOCs, mortgage-related lines of credit, or personal loans. Certain demographics are fortunate to have dedicated loan options available for purchasing their first home. This applies to first-time homeowners, low-income earners, veterans, service members, and eligible families. For example, a home loan for veterans offers unique benefits that can help them remodel their primary property after purchase. It is well known that a VA loan does not require a down payment.
Consider that the median cost of a new home in the US today is $430,000. To avoid PMI, 20% down payment is required on standard mortgages. That is around $86,000. Depending on the type of renovation, costs can quickly spiral into the thousands of dollars. Veterans are fortunate in that they don’t need to pay a down payment to qualify for a mortgage – it’s one of the many benefits of a VA loan. Instead, that money can be used (if available) to pay for property alterations. The alternative is refinancing through a VA lender, which is also a viable option for homeowners.
Time is Money
An important point needs to be made regarding homeownership longevity. The longer you own your own home and make regular monthly payments, the more equity you have in your property. Homeowners with skin in the game (many years of mortgage payments) have a much deeper well of equity to tap into. Often, it’s possible to access as much as 80% of the available equity in a home when the homeowner is in good standing with the mortgage provider. These refinancing options are an excellent resource for remodeling projects, upgrades, or even for purchasing a second property. It is often said that you need money to make money, but home equity is as good a place as any to start!