Home Equity Loan Helps Prepare for Sale
Realtors refer to a home's ability to make a great first impression as "curb appeal." When people view a handsome house from the street, they're enticed to go in and have a look. Spending money to improve property always increases the chances of getting a higher price in a shorter amount of time. Getting those results is especially important now that the housing market has begun to cool off.
Best results for home equity upgrades
Three of the most productive, market-tested places to invest when doing a makeover are:
- The kitchen: Money spent on kitchen upgrades returns a high yield, often more than dollar-for-dollar. If you can't afford, or don't need, a complete overhaul, concentrate on specifics like new appliances, flooring, and attractive, functional lighting.
- The bathroom: If you can create another bathroom-or half bath-without disrupting the floor plan, this is a solid investment. When Realtors search for homes on behalf of buyers, they limit the search according to the number of bedrooms and bathrooms. By adding a full or half bath, you may automatically double the number of potential buyers.
- Paint and trim: A relatively inexpensive approach for a home makeover is to concentrate on freshening it up with a good paint job in neutral colors that have wide aesthetic appeal. Not only does this make the house look better while protecting it from the elements, it also expresses a sense that you take pride in home ownership. Buyers and their building inspectors feel more confident about homes that are well maintained, and a freshly painted home conveys that attitude.
Home equity loans: convenient and easy
To pay for such makeover projects as landscaping, painting, upgrading kitchen appliances, or refinishing hardwood floors, a home equity loan is an easy and convenient option. These loans have low closing costs and can be processed quickly. And if you're planning to sell, you can choose an interest-only loan and enjoy inexpensive monthly payments. Since you'll pay off the balance at closing, the out-of-pocket cost of borrowing the money will be minimal. Many homeowners who use a home equity loan to spruce up a house for sale don't make any monthly payments, because the house typically closes before the first installment comes due.
There is one catch, however: Because lenders will not let you borrow money against a house that's already for sale, you need to plan ahead and secure the home equity loan before you list the property. Once you have the cash in hand, you can fix up the house and call the realtor.