Ready to Renovate? How to Prioritize Home Improvement Projects

Improving your home may increase its value and your satisfaction with the space.

Home improvement projects could add value to your home and make your space feel more functional, comfortable, or just more fun to be in. But choosing the right home improvement project may be a challenge, especially if you’re trying to get the most bang for your buck. It’s like finding the perfect home for your family all over again!

It’s normal to worry about choosing the right project or allocating too much money to the wrong upgrade. Let’s review the factors that you should consider to help you find the best project for your goals and your budget.

Key Takeaways

• Not all home improvement projects give you the same return on investment.

• There are several ways to pay for home improvement projects, from using savings to taking out a personal loan.

• When choosing a project, consider your goals, budget, and potential payoff before starting work.

How to Choose the Right Home Improvement Project

There are a few factors to consider when exploring your home improvement options and before meeting with contractors. Remember, choosing the right project isn’t just about what looks great or following the latest trends. It’s about matching the project to your vision for your home.

Keep the following in mind as you start planning your home renovations.

Set Clear Goals

Taking time to establish what you’re trying to accomplish could save you a headache down the line and may make it easier to choose the right project. Think about what you want the upgrade to achieve.

For example, if you’re trying to increase your house’s value before selling it, you may want to focus on renovations that offer the highest return on investment (ROI). This may include projects like renovating the kitchen, upgrading your bathroom, installing new landscaping, or even adding solar panels.

Or maybe you’re trying to turn your house into your dream home and want to prioritize your comfort. This could include projects like turning a spare room into a home office, adding a wood-burning fireplace to your living room, or swapping worn out carpet for hardwood floors.

Start With Safety

If your home has outdated or dangerous features, equipment, or appliances, those upgrades should take priority.

Take a look around your home and assess its current condition. If the roof is leaking or your home’s electrical wiring is outdated and not up to code, these repairs should be at the top of your list. Leaving outdated or damaged components in place could put your home and your safety at risk for damage and injuries.

If you’re not sure if your home is in good condition, you may want to schedule an appointment with a licensed home inspector. Their job is to assess the condition of the major systems in your home and provide you with recommendations of what needs to be done.

Identify Your Wants vs. Needs

Some home improvement projects are more of a necessity than a nice-to-have. For example, building a home addition to accommodate your growing family may be necessary if you’re already feeling tight on space. On the other hand, installing new carpet in the living room might be more of a non-essential renovation.

Consider which parts of your home are truly no longer serving your purposes and prioritize those home upgrades over ones that are merely cosmetic or won’t dramatically impact how you use your home.

Consider Your Budget

Before you start working on your home, it’s important to take the time to figure out how much your project will likely cost you, and how much you can reasonably afford to spend. Price out materials, contractor fees, permits, and anything else you may need during your renovations. You may also want to get estimates from several contractors before you agree to work with anyone.

Once you have a number, consider whether you’re able to afford that price or if you’d be better off waiting and saving.

Remember, the price you pay depends on where you live, the type of work needed, the materials, and more. Be sure to do your research and work with a contractor who offers the best quality work for a price that fits your budget.

Decide on a Timeline

Before you start a home improvement project, figure out your ideal timeline. Remember, some projects—like adding a pool—are likely only an option during the warmer months.

Additionally, certain projects may cost more depending on the time of year due to the demand on contractors and materials. For example, building a deck may cost more during the spring and summer than it would during the winter because more people want to build a deck during the warmer months.

Consider when you want the project done and what your ideal timeline is. If you’re trying to get a deck installed in July so you can use it for the rest of the summer, but don’t want to pay a premium, you may be better off choosing a different project.¹

It's also worth considering how long the project could take and how that timeline may impact your life. For example, if you plan to renovate the only bathroom in your home, you may need to factor in ancillary costs like a few nights at a hotel or even a longer-term stay at a vacation rental if the renovation work is extensive.

Figure Out Financing

Once you’ve identified the sequencing of your renovations, it’s time to find the funds! Luckily, there are several methods you could use to pay for your home improvement projects.

• Tapping into your savings: If you’ve been planning on certain renovations for a while, you may have money set aside in a savings account to handle the cost. Using your savings may help you pay less money for the project in the long run by avoiding interest charges or fees from loans and credit cards.

• Taking out a personal loan: Personal loans may be a convenient way to pay for your renovation, especially if you don’t have enough savings on hand. Using a personal loan for home improvement projects lets you borrow a lump sum, often with a fixed rate and set repayment period. Even better, there typically aren’t restrictions on how you may use the money once you receive it.

• Using a credit card: Depending on the project’s cost and timeline, using your credit card may be a good choice. Credit cards could help you purchase materials quickly and as needed during the project. But remember that those charges add up! If you don’t pay off your balance each month, you’ll owe interest on that balance. Credit card rates are often higher than personal loan rates, so using a card could ultimately be a more costly financing option.

• Borrowing from your home: If you’ve built up equity in your home, you may be able to use a home equity loan or home equity line of credit (HELOC) to finance your home improvement projects. These loans typically let you borrow up to 80% of your home’s equity and may offer a lower rate than personal loans and credit cards. That said, the loan is secured by your home, so if you fail to repay what you borrow, you risk losing your home.²

When considering how to pay for your renovations, consider the repayment terms, fees, and monthly payment amounts required for each financing method.

Final Thoughts

Choosing the right home improvement project means taking a look at what you want, what you need, and what you can afford. Typically, projects that add market value to your property are the best ones to prioritize. Once those renovations are complete you could start pursuing projects that spark joy for you and make your place feel like home.

To finance your home renovations, consider speaking with a financial professional to learn how each method could impact your finances. We’re happy to provide more information about personal loans too!