7 Best Home Renovations That Will Pay for Themselves

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Across the U.S., home values are rising. And in some cities, prices are increasing rapidly. Although it might seem like terrible news for potential homebuyers, it’s good news if you’re a homeowner — and if you have a plan to capitalize on your home’s rising value.

To take advantage of these rising trends, consider investing in renovations. Renovating your home is a useful way to increase your home’s value even more. The one caveat: Not all home improvements are worth the same. One upgrade could be far more valuable than another, yet more expensive. And, even if you identify which renovations you need, finding a way to pay for them is another matter.

Before you pick your next home renovation project, check out these seven options. And more importantly, learn about one of the most convenient ways to pay for them: a home equity line of credit.

man covered in white paint painting kitchen white
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1. Kitchen Remodel

Many real estate experts agree the kitchen is one of the places that homebuyers really notice and evaluate when looking at a house. So, a kitchen upgrade is a good investment — but it can be expensive. In fact, the average cost of a minor kitchen remodeling is over $20,000, according to Remodeling’s 2016 Cost vs. Value report.

Fortunately, kitchen renovations score points for return on investment. With an average cost of $20,122 and a resale value of nearly $17,000, you could recoup over 80 percent of the cost of a kitchen upgrade when it comes time to sell your home. But $20,000 can be hard to come by if you don’t think about all your options, such as a HELOC.

A HELOC is most often used for home renovations, according to TD Bank’s HELOC Reset Measure survey. One reason is because of its flexibility. Instead of a large lump sum like a mortgage that you repay in its entirety, you only repay what you borrowed with a HELOC and its interest. So if your kitchen remodeling costs unexpectedly rise or fall, you can rely on your credit line and draw accordingly.

man fixing wheel/mechanism attached to garage door rail
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2. New Garage Door Installation

A new garage door could be a further increase to your home’s value. Aesthetically, a new door can raise curb appeal. And in terms of energy, for example, you could raise your home value by installing a new, more energy-efficient garage door.

However, the new garage costs can be difficult to stomach. According to Homewyse.com, the average low-end cost for replacing a garage door is close to $800; the high-end cost is around $1,200. The distressing part is those figures are the cost per garage door, which often come in pairs in many modern homes.

See: Sneaky Expenses of Renovating Your Home

The cost to replace a two-door garage could range from roughly $1,600 to $2,400, based on these figures from Homewyse. However, this mid-range home renovation returns about 91.5 percent at resale, according to the Cost vs. Value report. Luckily, HELOCs with many different credit limit sizes can be utilized to pay for a new garage door.

Let’s say your home value is $284,000. If you have a current mortgage worth $200,000, you could get a HELOC with a limit of more than $50,000, depending on your lender.

That amount easily covers new garage doors. Plus, your monthly payment will likely be interest-only in the beginning, so you can knock out a renovation like this one and then focus on keeping your HELOC drawing minimal and smart.

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3. Refinished Hardwood Flooring

Hardwood floors can add an aesthetic bonus to your home when it comes time to sell. Yet, they typically take a beating over the years from children, animals, furniture and more.

Home improvement site Improvenet.com estimates the nation average reported cost of refinishing hardwood flooring to be $1,471. But at least you don’t need a big credit limit to renovate your floors.

And because a majority of HELOCs, since 2009, are for less than $50,000, according to TD Bank’s survey, you have a good chance of getting the HELOC and money you need for this kind of renovation.

roofer applying shingles with power tool
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4. New Roofing

New roofs tend to have solid returns on investment for homeowners. In fact, according to the National Association of Realtors’ 2015 Remodeling Impact report, homeowners could recover 105 percent of their investment in a new roofing project.

Fortunately, you can tap your home’s equity to cover the average reported cost of a new roof installation, which is around $6,850, according to HomeAdvisor.com. After all, the majority of HELOCs taken out in the past two years have credit limits of $50,000 or more. That easily covers the average cost of installing a new roof while building long-term value in your house.

Watch: 6 Home Renovations You Can DIY

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5. New Siding, Especially Vinyl

Vinyl siding attracts homeowners with its durability. Plus, homeowners often buy vinyl siding to improve energy efficiency. However, the NARI Remodelers’ cost estimate for new vinyl siding is $12,000. Clearly, this renovation can take a decent sized bite out of your budget. But it doesn’t have to.

Instead, take advantage of what your lender has to offer, such as a HELOC. Just make sure you choose a flexible HELOC in case construction costs go up.

One of the benefits of a HELOC is you only pay interest on the amount you draw down — not the amount borrowed, said Mike Kinane, senior vice president of home equity at TD Bank.

“Additionally, given that [a TD Bank HELOC] is revolving, homeowners are able to re-use it in the future without reapplying and paying any closing costs again,” he said.

Not all HELOCs are created the same, however, so look for one that has a fixed rate. “[TD Bank’s] fixed-rate option allows customers to know that they can have the flexibility of a HELOC with the peace of mind that comes with being able to lock all — or a portion of their balance — into TD Bank’s current fixed home equity products,” added Kinane.

Armed with the funds needed for a new roof, you could make a solid return on your renovation.  According to the Remodeling Impact Report, new roofing can give you an 83 percent return on the original cost of the project.

pristine yellow house with red door
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6. New Front Door

Like garage doors, your home’s front door is one of the first exterior features potential homebuyers notice. So, maintaining and upgrading your front door is a valuable renovation.

When it comes to expenses, the average cost to replace a front door differs depending on the material. According to the Cost vs. Value report, mid-range fiberglass door replacements cost more than $3,000 while steel front doors cost roughly $1,300.

But regardless of material, a new front door replacement offers high returns. For a new fiberglass front door, you could recoup more than 82 percent of the cost, while a new steel door could get you as much as 91 percent back on your renovation investment.

If this project takes longer than expected, consider getting a HELOC with a fixed-rate option. That way, you should be able to protect yourself from prime rate increases. Eliminating that variable from your loan creates more flexibility. You can better absorb the cost of a major renovation, such as a new front door, and still profit from the value it adds to your home.

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7. New Fiberglass Insulation

Installing new fiberglass insulation can be expensive, even if it positively affects your home’s value. However, you don’t need to redo your entire house’s insulation in order to earn money from reselling your home. Instead, taking a piecemeal approach can save you money and reap rewards.

For example, the average national cost of installing fiberglass attic insulation is $1,268, according to the Cost vs. Value report. That can seem like a lot, especially if you’re strapped for cash. But you can make it work — and the potential payoff could be very beneficial.

The flexibility HELOCs offer makes them useful to cover essential home renovation expenses like home insulation. For example, TD Bank’s HELOC comes with a $25,000 minimum credit line, which could cover attic insulation and much more. Even better: Although there is a minimum line, you aren’t required to draw a minimum amount of credit.

With a convenient way to pay for insulation, it’s hard to resist going through with this home improvement. The resale value of attic insulation is $1,482, which equates to recouping more than 100 percent of the renovation cost, according to the Cost vs. Value report.

You don’t need to redo your entire house to get the most value out of your home. By picking and choosing the most valuable renovations, and finding a convenient way to pay for them, you can easily take advantage of rising home values.

Keep Reading: Craziest Things That Kill Your Home’s Value

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