There are plenty of benefits to renovating your home. Doing so could make it a more comfortable place to live. And if you’re spending more time at home than ever — say, because you’re still working remotely — then that’s important.
The right home improvement projects could also add a lot of resale value to your home. You may not be thinking about listing your property anytime soon, but you never know what life changes might come your way. And having an updated property could be your ticket to a higher sale price when the time comes to move to a new home.
But while improving your home has its benefits, now may not be a great time to move forward with projects that aren’t essential. Here’s why.
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Materials are more expensive and harder to get
In the course of the pandemic, a number of supply chains have been interrupted — largely due to the shutdowns that occurred in 2020. As such, a number of key building materials are still in short supply.
In fact, the price of lumber soared earlier this year due to a limited supply. That cost has since come down, but it’s still an expensive product to come by.
All told, if you attempt to renovate your home today, you might pay more for the materials used in your project, and you might also have to wait longer to get them. This holds true whether you’re doing the work yourself or using a contractor for the job at hand.
And that’s why it could pay to put off home improvements that don’t need to be done right away. If you’re really miserable in your cramped kitchen — a room in your home you use every day — and the idea of waiting six months to expand it seems impossible, then that’s the sort of project you may not want to delay. But if you’re looking to replace your perfectly functional fence with a nicer one, then that’s the sort of job that can probably wait.
How to finance home renovations
Whether you decide to delay your home renovation project or not, if you can’t pay for that work in cash, then it’s important to figure out how to swing it affordably. Some options you might consider include:
- A renovation loan, which is a personal loan you use for home improvements. If you have a great credit score, you might snag an affordable interest rate on this type of loan.
- A home equity loan, which lets you borrow against your home. You might pay less interest with a home equity loan compared to a renovation loan.
- A home equity line of credit, or HELOC, which also lets you borrow against your home. HELOCs give you flexibility when renovating because you can borrow some or all of the line of credit you qualify for. And as is the case with a home equity loan, your interest rate may be quite affordable.
- A cash-out refinance, where you get a new mortgage whose balance is higher than your existing balance and you use the extra money for renovations. A cash-out refinance could be your most affordable option of all of these if your credit is strong. That’s because today’s refinance rates are extremely competitive.
It’s a tricky time to renovate a home because materials are pricey and harder to come by. Once supply chains catch up to demand, the cost of common building materials should come down and delays should become less of an issue. Waiting to renovate could spare you a lot of stress in addition to saving you money.