Your home’s value and whether you can get a better deal on your mortgage is dependent on a few factors. The housing market as a whole is a factor, as is your credit score, the state of your neighborhood and your home’s curb appeal. Improvements to your home can greatly affect the value and that includes renovations you’ve recently made to your garage. However, such improvements don’t always equal lower mortgage payments. They have to be completed in the right way for the right reasons.
Whether you are planning on improving your garage or you recently completed renovations, here are some things to keep in mind if you’re planning to refinance your home.
Building a New Garage Versus Improving Your Garage
Some people might be tempted to improve their garage for a refinanced home after they hear that a new garage can add tens of thousands of dollars to a home’s resale value. That’s impressive, but that’s for those who add a new garage to their home; simply remodeling an existing garage won’t add that kind of value to a home.
Of course, that doesn’t mean that remodeling a garage doesn’t add any value to a home. On the contrary, something as simple as adding a new garage door can add over 75 percent of the money that was put into the project. Other improvements that you can make to a garage that will add value to your home include repainting the garage, installing a new roof or building an addition. Whatever you do won’t add as much value to your home as a brand new garage, but it will add some value considering that it’s a much less expensive project.
Evidence of Your Garage’s Improvement
In order to make sure that your garage’s improvement is a factor in your home’s refinancing, it is in your best interest to have as much evidence of your renovation project as possible. According to Houston Overhead Door, a licensed supplier of industrial-strength doors, this means recording all expenses incurred during the project and taking photographs of your garage before and after the construction has been completed. This will help an appraiser determine the changes that were made to your home and whether they would be a factor in refinancing.
Providing Comparables
Part of the refinancing process involves taking a look at comparable properties. Although this is part of an appraiser’s job, you can save some time and effort by finding your own comparables in your neighborhood. These homes should be about the same age and style as your own home, and they should show how your garage’s improvements might have added value to your own home. It may not be necessary for you to do this, but it will help speed the process along.
Dealing With The Appraisal
An appraisal will be conducted on your home when you apply for a refinanced mortgage. During the assessment, the appraiser looks at all of the features of your home including its physical condition and any improvements that have been made. They may also ask to see evidence of your recent projects such as receipts, photographs, or other records.
The appraiser’s report is then sent to the lender who considers it to determine how much they are willing to lend you and what type of interest rate they can offer you. Using this information, they can determine whether or not refinancing with them would make financial sense for you.
Measuring Your Rate of Return
If you refinanced your home to add value by improving your garage, you need to make sure that the cost of the improvement does not negate any appreciation in value. To do this, measure your rate of return or the rate at which you expect to recover from the investment. You can find this rate by taking the difference between what you paid for improvements and what it increased your home’s value and dividing it by the amount that is being paid over time on your mortgage loan. This will help you understand whether or not refinancing with a lower interest rate would be worthwhile for you in terms of recovering your costs.
Making sure that all aspects of a home are improved can increase its resale value and could also lead to a better mortgage loan if refinanced. If you plan on remodeling your garage and then applying for a refinance, make sure to take the proper steps to get the most out of the investment. That way, you can be sure that your improved garage will help you not only enjoy it now but also benefit in the future when it’s time to move on.
Refinancing your home is often worth your time if you want lower mortgage payments or you’re thinking of selling, but you should do anything you can to improve the value of your home if you’re serious about it. Your garage may not seem like the most important part of your home, but it is fairly easy to made improvements without spending a lot of money. Whether you’re adding a new garage door or a new coat of paint, it’s hard to go wrong with this kind of project.