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The kitchen is the heart of the home, and it’s one of the most important rooms when it comes to home value. In fact, research shows that a kitchen upgrade provides a rate of return of around 72 percent when you sell your home. Talk about a sweet return on investment!
But how do you get this kind of monetary boost from your kitchen? A few minor upgrades can make all the difference with prospective buyers. These simple changes not only increase its appeal but also improve functionality. Potential buyers will be impressed by the tiny details and may make a higher offer in return.
Read on for some simple kitchen upgrades that can increase your home’s value. Not sure how you’ll pay for the renovations? No problem. We’ll cover that too. We will discuss the difference between utilizing a cash-out refinance vs. a home equity loan vs. a HELOC to access your home’s equity for remodeling.
1. Add Light and Brighten Up Your Kitchen
Kitchens that are dark and dreary can be off-putting to potential buyers. If you want to increase the appeal of your kitchen, the first thing you should do is add more light.
Adding light will make the space look larger and brighter and showcase your countertops and cabinetry to their full potential.
You have a few different options for doing this, including adding undercabinet lighting, installing pendant lights or track lighting above your workspace, or putting in a skylight. You can also add light-colored curtains or trim to your windows to brighten your kitchen.
2. Update Your Countertops
What better way to add value to your kitchen than to replace your countertops?
If you have laminate or vinyl countertops, this is the perfect time to upgrade to a more stylish surface. Granite is one of the most popular countertop materials and a common feature in high-end homes. It’s also a very durable material that will last for many years to come.
Marble is another standard option for kitchen countertops. While it’s a little more expensive than granite, it also offers a unique aesthetic that your buyers will appreciate.
While granite and marble are favorite countertop materials, there are also some more affordable options, like quartz, porcelain, and ceramic. Whichever material you choose, make sure it fits with the rest of your kitchen design.
3. Put in Brand New Appliances
If your appliances are outdated or in need of repair, this could be a deal breaker for potential buyers. In fact, outdated appliances are a common reason a buyer might make a lower offer on a home.
If you have appliances that require replacement, now is the time to replace them. Buyers will appreciate your efforts and could add a few thousand dollars to their offer in exchange.
If you’re unsure what appliances to purchase, you should talk to a real estate agent. They’ll be able to give you the inside scoop on what potential buyers are looking for in a kitchen and recommend appliances that will boost your home’s value.
4. Change Out the Flooring
This is one of the easiest upgrades if you have old or dated flooring in your kitchen.
While hardwood flooring is the most common type of flooring in high-end kitchens, it’s also one of the most expensive options. Thankfully, many other types of flooring are both affordable and attractive.
For instance, laminate is one of the most common types of kitchen flooring. It comes in a wide variety of textures and colors, so you can easily find a style that fits your kitchen and budget. Other types of flooring, like vinyl, are a little cheaper but also offer various colors and textures.
5. Install a Functional Storage Space
Storage space can be another make-or-break feature for potential buyers. If you want to increase the value of your kitchen, add some functional storage space. This can be as simple as adding a few extra cabinets or installing a built-in bookshelf or pantry.
Overall, any of these improvements will add value to your home by giving you more space to store your appliances and dishes.
Funding Kitchen Repairs Using Home Equity
Let’s face it, we all want our homes to be pleasant places to live. So making home improvements with the help of home equity financing can be an excellent way to recoup some of that value and recreate equity in your house.
Many homeowners can’t afford the renovations they would like out of pocket. Fortunately, there are three ways you can use your home equity to fund home improvement projects: a cash-out refinance, home equity loan, or home equity line of credit. Let’s take a closer look at each.
Cash-Out Refinance
A cash-out refinance allows you to refinance your home to get cash out of your equity. Essentially, your new loan is larger than your original loan, and when the original loan is paid off, the balance is paid to you in cash. You can use this money to make home repairs or upgrades, pay off creditors, or even invest in a rental property.
You can typically borrow up to 80 percent of your home’s equity with a cash-out refinance, and there are no restrictions on how the money has to be spent. As the home refinance replaces the original loan, you only have one monthly loan payment to make. You also have the option to secure a new interest rate, change your repayment term, or even switch from an adjustable- to a fixed-rate loan, or vice versa.
Home Equity Loan
A home equity loan allows you to take out a lump-sum loan against your home’s equity. As with any loan, you will have to pay back the amount you borrow with interest. This loan is separate from your home loan and will need to be repaid in separate monthly installments. Typically, up to 85 percent of your home’s equity can be borrowed with a home equity loan.
Home Equity Line of Credit
A home equity line of credit, or HELOC, is a type of home equity loan that allows you to draw on your home’s equity as you need it, rather than in a lump sum. HELOCs come with a draw period of 5 to 10 years and then a repayment period, during which you can no longer borrow. Since you are only charged interest on what you borrow, this can be a great option if you don’t know exactly how much you need or if you plan to use the loan in smaller bits. As with a home equity loan, lenders usually allow homeowners to borrow up to 85 percent of their home equity with a HELOC.
Tapping into the value of your property to fund your kitchen renovations can be a great option for many homeowners. Whether you’re planning to sell soon or hoping to live in your home for many more years, the kitchen is one of the most essential rooms in any home. Speak with a lender to discuss your options for accessing your home equity.
In Washington State, you can reach out to the home loan experts at Solarity Credit Union to discuss a cash-out refinance vs. home equity loan vs. HELOC to fund your kitchen upgrades so you can enjoy the benefits of a new space.
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