Best Renovations to Increase Your Home’s Equity
Home equity is the amount you get when you subtract the outstanding balance you owe on any mortgages from your home’s market value. Home equity increases when you make payments on your mortgage, when property values increase in your area, and if you increase your home’s value by upgrading it.
Increasing home equity is an admirable goal and a great way to achieve it is by renovating your property. Various improvements could increase your home’s value, but some may be better than others. Ask a local real estate agent or contractor which upgrades homebuyers are looking for. Even when an upgrade adds less value to your home than it costs, remember, you get to enjoy that improvement until it’s time to sell.
You would like the money you spend on an upgrade to equally boost your home equity, but that’s not necessarily the case. A 2022 study from the National Association of Realtors and the National Association of the Remodeling Industry found that the following projects had the best return:
Hardwood floor refinishing recovered 147 percent of its cost.
New wood flooring, 118 percent.
Insulation upgrade, 100 percent.
Basement conversion to living area, 86 percent.
Closet renovation, 83 percent.
In addition, respondents reported the interior project that brought the most satisfaction was adding a home office.
Roofing recovered 100 percent of its cost.
Garage door, 100 percent.
Fiber-cement siding, 86 percent.
Vinyl siding, 82 percent.
Vinyl windows, 67 percent.
Respondents reported that the exterior project that brought the most satisfaction was painting the siding.