Published in: Banks | July 28, 2019

4 Questions to Ask Yourself Before a Major Home Renovation


Home improvements are a major undertaking, so think about whether yours make sense and if the time is right to embark on it.


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The home you buy isn’t always the home you actually want to have. You might settle for an outdated kitchen and update it later, or buy a house with an unfinished basement and turn it into usable square footage after the fact.

Home improvements are fairly common, and in some cases, they’re a great investment. But before you embark on a major renovation, ask yourself the following questions to make sure you’re ready -- and that the work in question is worth doing. 

1. How will I pay for this project? 

Any time you face a major expense, you need a plan for how you’ll pay for it. Now you have several options when it comes to funding a home improvement project. You could dip into your savings account, which is a good way to complete your renovation without incurring debt. Just make sure, however, that you’re not raiding your emergency fund in the process. That money should be earmarked for unplanned expenses, which home improvement costs are not. 

If you don’t have the cash to fund your project, you can get the money for it by tapping your home equity. With a home equity loan, you can borrow against your property and access funding in a relatively cheap and easy fashion. Just be aware that if you default on that loan, you risk losing your home, as it’s what’s used as collateral. 

You can also charge your home improvement project on a credit card, but it’s not wise to do that if you don’t think you’ll manage to pay your entire bill when it comes due. You’ll generally pay much more in credit card interest than you will in home equity loan interest, so the latter is your better bet if the option exists. 

2. Will I get my money back if I sell -- and do I care?

Some home renovations are more likely to deliver a return on investment than others. For example, it generally makes more sense to pump money into a kitchen or master bathroom than it does to install a wine cellar or theater room in your basement, because while those items are nice to have, not everyone desires or places a lot of emphasis on them. If your goal is to sell your home in the near future and get your money back on your renovations (and then some), make sure you’re spending that cash in the right places.

That said, some people make home improvements not because they think they’ll benefit financially, but because they enhance their quality of life. If you’ve always wanted a hot tub and plan to live in your home for the next decade, then go ahead and add one if you can afford to -- even if you don’t see a dime of your investment back. 

3. Have I planned for this logistically?

If you’re renovating one of three bathrooms in your home, you can compensate by using the other two while your project is in progress. But if you’re demolishing your kitchen and having a new one built, you’ll need to plan around that for the duration of that renovation. Similarly, if you have young children or work from home, you’ll need to make sure you can manage the disruptions your renovation will produce. 

If you’re not sure what those will entail, talk to the contractor you’re hiring and ask for a breakdown. For example, some projects might result in a temporary loss of power to your home, or might require that your water supply be turned off. Find out what you’re in for and make certain you can manage it from a logistical standpoint. 

4. Should I just buy a new home instead?

There may come a point when it no longer pays to sink money into your current home when you could instead put that cash toward a new one. If you’re planning on one major renovation to turn your house into your dream home, then it might make sense. But if your anticipated project is only one of many, it might pay to see what the housing market in your area looks like, and whether a different home will address all the things you’re trying to correct in your current living space. 

Imagine you’re looking at spending $30,000 to redo your kitchen and another $30,000 to finish your basement. You might find a home nearby that costs $50,000 more than your property with a new kitchen and basement that’s fully usable. In that case, it might be beneficial to just move rather than spend the money to update your space and deal with the hassle of long-term construction.

The last thing you want to do is pump money into a home improvement project and regret it immediately after the fact. Make sure to consider these questions before starting a renovation, especially if it’s a substantial one. 

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