Selling your home is a big decision—and preparing it for the market can be overwhelming, especially if your home needs updates to attract buyers. But here’s the dilemma: the right renovations can increase your home's value, but they can also come with hefty costs upfront. How do you pay for these upgrades without draining your savings?
Here at JSB Home Solutions, we’ve teamed up with Kendra Carter of The Carter Group with Keller Williams Realty, a leading realtor in the Columbus, Ohio area. Our goal is to break down the best financing options for home improvements before selling, no matter who you choose to renovate or sell your home. With Kendra’s deep understanding of what buyers look for and our 46 years of remodeling expertise, we’ll guide you on how to make smart financing choices that can boost your home's value and attract more buyers.
By the end of this article, you'll know the financing options available, understand which ones might fit your needs, and feel prepared to make the best choice for your situation.
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Renovating before selling can be a strategic move to increase your home’s appeal and value, helping it stand out in a competitive market. “77% of buyers won’t consider purchasing a home that isn’t “move-in ready”,” according to a nationwide study done by Curbio. When a home feels fresh and well-maintained, buyers are more likely to envision themselves living in it, which can result in quicker offers and potentially higher sale prices. By tackling key updates, you can also address any issues that might otherwise come up in inspections or negotiations, saving time and stress during the closing process.
As Kendra Carter of The Carter Group explains,
“Buyers often gravitate toward homes that feel updated and well-maintained. A few smart upgrades can create a powerful first impression and impact their offers.”
From updated kitchens to modern bathrooms and enhanced curb appeal, these improvements show buyers the home has been cared for and is worth their investment.
The most value-boosting projects often include kitchen remodels, bathroom upgrades, and curb appeal enhancements like landscaping or fresh paint. These improvements not only make your home more attractive but can also increase your home’s value—allowing you to list at a higher price.
Exploring the right financing options is key to keeping your remodel within budget. Here are some popular choices, along with their benefits and drawbacks:
“This option is great if you have substantial equity and want a predictable repayment schedule.”
Pros: include low-interest rates and potential tax benefits, but cons involve using your home as collateral, which can add risk.
When should you consider a Home Equity Loan for home renovations?
Home equity loans are generally best for projects that significantly boost home value, as they allow you to recoup most (or all) of the renovation expenses in the final sale price.
Pros: Flexible borrowing that gives you access to funds as projects progress, with interest only on the amount used. Cons: The interest rates can fluctuate.
When should you consider a HELOC for home renovations?
For short-term selling plans, a HELOC is most effective if you can handle fluctuations in monthly payments and if the renovation costs are likely to be recovered in the sale.
Pros: No risk to your home, fast approval. Cons: Higher interest rates than home equity loans.
When should you consider a personal loan for home renovations?
If you’re tackling upgrades like painting or light fixture replacements that can improve your home’s appeal but don’t require a major investment, a personal loan could be a convenient solution.
Pros: Accessibility and potential rewards. Cons: High-interest rates, so not ideal for larger projects.
When should you consider credit cards for home renovations?
In general, it’s wise to use a credit card only if your renovation costs are low and you have a clear plan to pay off the amount within a short period. For larger projects, other financing options are likely to be more cost-effective.
Pros: Lower interest rates than personal loans and a potentially larger amount. Cons: Extends your mortgage payments, and you’ll need to cover refinancing costs.
When should you consider a cash-out refinance for home renovations?
If you have time to manage the refinancing process and the renovation impact, cash-out refinancing can be an effective solution for adding value before a sale.
Pros: Convenience, often with zero-interest options for a set period. Cons: Limited terms and may only cover specific projects.
When should you consider contractor financing for home renovations?
For homeowners preparing to sell, contractor financing could be a solid choice for smaller projects if the terms are competitive. Be sure to review and compare with other financing options to ensure it’s the best deal for your needs.
The first thing to do is consider the cost of renovations. Do they fit in your budget and will you be able to recoup much or all of the cost when your house sells? The average cost of a kitchen remodel is $20,000 - $50,000. Bathroom renovations usually cost $10,000 - $30,000 on average. If you’re undertaking larger projects, options like a HELOC or cash-out refinance might make sense. For smaller updates, credit cards or personal loans could be more manageable. Kendra points out,
“Align your financing choice with your project scope and budget to avoid overextending yourself.”
Your timeline influences the best financing choice. Short-term plans might favor quicker, lower-commitment options like credit cards or contractor financing, whereas long-term plans could accommodate home equity loans or refinancing.
Review your credit score, income, and current debt before selecting a financing method. Good credit can secure lower rates on personal loans and HELOCs, helping you manage renovation costs more affordably.
Before committing, weigh the potential resale value against the cost of financing. Ask yourself, will this renovation truly add value to my home, or is it an expense?
“Think of it as an investment,” Kendra advises. “Some renovations pay off, while others might not bring the returns you expect.”
“A kitchen update, even if minor, often appeals to buyers, while some larger projects may not add as much value unless they address a noticeable need.”
Also, consider how the renovation affects your home’s competitive positioning. If similar homes in your area are recently updated, a renovation can make your listing more appealing and potentially speed up the sale.
If you’re considering a large remodel project and not planning on selling right away after the project is completed, a home equity loan or home equity line of credit (HELOC) could be the best choice for you.
If you are completing smaller projects and upgrades and want to sell soon after finishing the renovations, a personal loan, credit cards, or contractor financing might be the way to go. We’ve mentioned contractor financing in this article, and at JSB, we offer several financing options. Read this article for specific examples of contractor financing packages if you think this could be the best option for you.
If you want lower interest rates or a larger amount than what personal loans, credit cards, and contractor financing offer, and don’t mind going through the refinancing process, a cash-out refinance could be what you are looking for.
If you're ready to start the financing process, consider consulting a financial advisor or discussing your goals with a trusted realtor who knows the Columbus, Ohio housing market. Remember, the goal is to make smart, value-driven decisions that pay off at closing. For more guidance on financing and renovation tips, schedule a consultation today!