How To Increase Home Value

Increasing Your Home's Value Grows Your Equity and Can Make You Wealthier

Increasing your home's value can improve your financial situation because the more valuable the home, the more profit you’ll make if you sell it. You’ll also be able to borrow against that value at much lower rates than other types of loans. Making strategic improvements can increase the appraisal value of your home, give you more equity, and increase buyer demand when you’re ready to sell.

Some home upgrades offer a much better return on your investment. Here are a few key options to consider that are most likely to increase your home’s value.

What Increases Home Value the Most?

Making any improvements or upgrades to your home will typically increase your home value. However, the return on investment for various home improvement projects differs because buyers are typically willing to pay more for some upgrades than others. The cost of home renovations, your location, the quality of the upgrades, and local market conditions also affect your ROI on home improvements.

The table below shows some of the different remodeling projects that tend to offer the highest ROI so you can make strategic choices when considering which project adds value to your home.

Why Improving Home Value Matters

Improving your home value matters because it can improve your financial situation. Here are some of the biggest benefits:

• It boosts home equity: Equity is the amount of your home’s value you own mortgage-free. When your home is worth more, you have more home equity that you can borrow against and that grows your net worth.
• It means you can sell for a bigger profit: If your home is worth more, you can sell it for more. You can make a larger profit, walking away with more money after paying off your remaining mortgage balance.
• It helps you get rid of private mortgage insurance (PMI): If you have private mortgage insurance, you can eliminate it once you enough equity. For example, you can remove PMI on conventional loans once your loan-to-value ratio drops to 80% of what your home is worth.
• It means you have a more functional, enjoyable space: When you upgrade your home, you can create a space you enjoy more and that works better for your family's needs.

6 Best Ways to Increase Home Value

Here are some of the best ways to increase your home's value.

1. Kitchen and Bathroom Remodels

Kitchens and bathrooms tend to make a huge impact on your home's appraised value (the value of your home, as calculated by a state-licensed professional appraiser). You tend to get the biggest ROI when you remodel these spaces because they are important to buyers looking for functional, attractive homes.

Upgrades like cabinet refacing, new countertops, modern appliances, modern tile or flooring, and improved lighting can make a dated space look new. A new vanity and fixtures or upgraded showers or tubs, also make a bathroom much more functional and attractive.

Since these features and fixtures tend to look "outdated" quickly, and can be more expensive to upgrade, buyers often prioritize homes where major updates to kitchens and baths have been made.

2. Curb Appeal Enhancements

Enhancing your curb appeal can have a big ROI because the outside of the home is usually the first thing a buyer sees (at least in person). Making a strong first impression can impact buyer perceptions of the entire home.

There are many potential ways to increase curb appeal, including:

• Making landscape improvements, such as adding new flowers, plants, or bushes
• Upgrading your interior paint or siding
• Upgrading outdoor living spaces, such as adding a patio or a deck
• Installing a new front door to replace an outdated one
• Upgrading your driveway or walkway, especially if you have older, cracked concrete or gravel

3. Energy Efficiency Updates

Making a home more efficient can reduce your energy bill. As the costs of electricity rise and concerns mount about climate change, many buyers are interested in smart homes that incorporate energy saving features like smart thermostats, energy efficient windows, and LED light fixtures that use less energy.

4. Maximize Square Footage

Finishing a basement or an attic can create more functional square footage, which increases a home's value. Adding square footage makes one of the biggest impacts on how your home fares relative to real estate comps, or comparable properties that have sold recently. The more usable square footage you have, the more the home is usually worth.

5. New Flooring and Paint

A fresh coat of paint is a relatively inexpensive upgrade that can make a home look new. New flooring can also make a big impact, especially if you are replacing old or worn carpeting or scuffed hardwood.

6. Declutter and Deep-Clean

Decluttering and deep cleaning costs little to nothing (except a lot of sweat equity) but can make your space look larger and more inviting. When you are in the process of selling your home, cleaning and removing many personal items will give your home's value a boost by helping buyers picture themselves in your space.

Increasing Home Value FAQs

Need to know more? Here are some additional details about increasing your home’s value.

What Increases Home Value the Most?

Making strategic upgrades to your home, such as remodeling a kitchen or bath, can have the biggest impact on your home's value.

These spaces are a major focus for many buyers, and removing dated fixtures can make a home much more desirable.

What’s the Cheapest Way To Increase Home Value?

The most cost-effective way to increase home value is to clean, declutter, and potentially apply a new coat of paint. These upgrades cost very little and can make a space look newer and more inviting.

Should I Renovate Before Selling My Home?

When you are exploring how to sell a house, renovating can sometimes make sense, but it depends on your location and what's customary in your market. If all of the other homes in your area are upgraded, renovating may be more important. A local real estate agent can offer insight into whether renovating makes sense for you.

Final Thoughts: How To Increase the Value of Your Home

Increasing the value of your home gives you more equity and can make it easier to find a buyer and sell for a greater profit. Explore your options for renovating to increase your home's value, and if you need help financing home upgrades, get in touch with Freedom Mortgage today and find out if a lower-rate cash-out refinance loan or lower-cost HELOC could be right for you.