If you’re a homeowner, it’s likely you’ll come across characteristics of your home that you want to change, upgrade or get rid of. These transformations call for either a home renovation or a home remodel. Some use these terms interchangeably but, in reality, they can be quite different. And depending on what you want to do, it can take a significant amount of time, energy and money.
Learn more about remodels and renovations to see which is right for you and how you might be able to finance them.
The Definitions
Home Remodel: A remodel transforms the structure of your home. This is typically a larger and more costly project that may require the help of professionals. Some remodeling projects include a kitchen or bathroom remodel, adding more space or even a full room to your home, finishing up an attic or basement or constructing a deck attached to the back of your home.
Home Renovation: A renovation is typically a smaller scale project than a remodel. When you renovate, you’re usually working with the space you already have to make it more attractive or functional and you generally wouldn’t be changing the structure of your home. Many home renovation projects can be done yourself, without the help of a professional. These projects can include painting a room or other fixtures like cabinets, installing smart devices, replacing hardware or upgrading your light fixtures.
However, not all renovation projects are small. Some can be more complex, including replacing windows or a garage door, and these can require the help of a professional.
The Cost
Since a home remodel is generally a bigger project than a renovation and may require the labor of others, they typically cost more. Prices for both a remodel and renovation greatly vary by the project, products used and your location.
For example, a full kitchen remodel can cost anywhere from the low to high $10,000s range, depending on what you want to do with your kitchen. And these costs can include demolition, electricity rewiring, plumbing, new fixtures and appliances and more. Because these costs can vary so much, it doesn’t hurt to take the time to shop around before starting your project so you can help keep costs to a minimum.
In contrast, a renovation is typically less costly. Since you likely won’t be knocking down walls or changing your plumbing, you may not need labor. And if you’re taking on a small project, like painting a wall or two, it can cost as little as one can of paint.
One caveat, however, is if you’re doing a renovation that may be dangerous like climbing your roof to replace shingles. If that’s the case, you may want to consider hiring someone to do this for you, which can increase the cost of your renovation.
The Factors
So, which kind of project do you want to take on? If you’re on the fence about what to change about your home but know something needs to, it can be worth it to consider what kind of project will give you a return on your investment. Projects like adding smart devices or adding on another room or deck may be able to increase your home’s value and equity.
Additionally, you may want to consider how long you plan on staying in your home. If you know you want to move in the future, you may not want to spend thousands and thousands of dollars on a large-scale remodel. But if you know it’s your forever home, it may be worth it to upgrade so you can enjoy it to the fullest for the rest of your time there.
Whatever you decide to do, make sure you take into consideration your budget, your future plans, and the return on investment beforehand.
The Financing
If you think you don’t have enough money in your savings account for a renovation or remodel, you may have other options to finance your project.
Cash-Out Refinance
A refinance replaces your current mortgage with a new one. And for those who have enough equity in your home, you may be able to tap into it to get cash out with a refinance. Many often use this cash for a home remodel or renovation, but they typically use this option if they’re able to secure a lower interest rate than their original one.
Personal Loan
A personal loan can help homeowners get cash quickly, but keep in mind that interest rates for these types of loans can be relatively high. If you want to complete your project fast or are on a time crunch, you may want to consider a personal loan.
Government Loans
Many lenders provide loans insured by The U.S. Department of Housing and Urban Development (HUD), and there are some loan options available that can help you renovate or remodel your home. For example, if you find a home you want to buy that needs a little care, a 203(k) Rehabilitation Mortgage can help you repair, improve or upgrade it. Additionally, a Title 1 Loan can help you do the same with your current home.
Make Your Home Your Own
No matter what you decide to do, remember that it’s your home. You should be able to enjoy it to the best of your ability. Even if that means changing your kitchen cabinet’s hardware that’s currently an eyesore or basking in the sunlight on a summer day on a newly built back porch. You deserve it.
This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.
