3 Signs You're Going Overboard on Home Improvements

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Renovating a home can be expensive. Here's how to know when you're spending too much.

There are plenty of good reasons to renovate a home. Not only can making improvements create a more comfortable environment, it can also increase your home's value -- if you eventually sell it, you might command more money.

But if you make home improvements, it's important to not get in over your head. Here are three signs you may be.

1. You're exceeding your renovation budget

You may have a certain dollar amount in mind for your renovation based on research and quotes from contractors. If you're going well above the number you initially wanted to stick to, you may want to take a step back and readjust your expectations.

Remember, you don't need to go all-in on a renovation project to make it worth doing. If you upgrade your kitchen, you don't need the fanciest backsplash or countertop materials, and you don't need the most expensive appliances. You may be more than fine with updates that improve your space, but aren't necessarily the absolute top of the line.

2. Your home will be the most upgraded on the block

Believe it or not, there is such a thing as over-improving your home, at least from a resale perspective. If you sink too much money into your home, you may not get it back when you put it on the market. And if your renovations will make your home worth a lot more than the typical property on your block, you may be doing too much.

Say the average home on your block is worth $350,000. If you upgrade yours so that it might appraise for $450,000, that's not necessarily a good thing because future buyers who seek a home on your street may not have the budget for a home that costs $100,000 more.

Of course, sometimes, homeowners make renovations because they want to -- not because they're looking for higher resale value. If that's the case, and you expect to stay in your home for many years and enjoy your upgrades, then go for it. But if part of your goal is to command a higher sale price later, know that going overboard generally won't get you there.

3. Your updates won't enhance your quality of life

Most home improvements won't give you a 100% return on investment. You might recoup 80% of your investment in the form of a higher sale price, but getting all of your money back is pretty rare. That's why you shouldn't make improvements you don't really care about, even if they might lead to a higher sale price in time.

If you're happy with your laminate flooring, don't take on debt to upgrade to hardwood flooring (especially if you have kids or pets at home). Rather, spend your money on renovations to help you enjoy your home more, like finishing your basement for extra living space.

Owning a home is expensive. You need to cover your mortgage, pay your property taxes, and tackle repairs. So if you're going to renovate, keep yourself in check. You might sorely regret overspending on home improvements.

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