How to Use a Home Equity Loan to Remodel Your Home

Top three reasons to use a home equity loan to remodel your home in Austin, Texas.

We loved our neighborhood, but not our home…

When Veronica and I first moved to Austin, we bought a relatively inexpensive home with the intent of turning it into a rental after selling our property in the country and building for ourselves. But our plans changed for a few reasons.

Do you love your Austin neighborhood?

It turns out that the house we bought is in a great location. The neighborhood is friendly with good schools, our gym is right around the corner, and we have some of the best running and mountain biking trails in Austin right out our front door. So we really love where we live, even if we weren’t in love with our home.

How much has your Austin, Texas home increased in value?

Home and land prices skyrocketed through COVID. Houses are selling for 1.5-2X what they were selling for in 2019. That means that a $500K house in 2019 is now $750K to $1M. In-town lots have experienced even higher rates of appreciation.

Does a HELOC make more sense than a new mortgage?

Interest rates shot up from a historic low of around 2% to over 6+%, drastically reducing our buying power.

So we had a choice; we could either stay in our neighborhood and move into a newer home a couple of blocks over, paying thousands more in interest per year on a house that we still don’t love, or move out of our neighborhood and make commuting for everything (gym, school, groceries, MTB trails) a daily hassle.

We decided to do neither. We thought, “We like where we live, we just don’t love our home.” A full remodel of our current home made more sense than moving. We redid everything - new roofing, siding, windows, doors, floors, paint, bathrooms, kitchen, and decks. We even built a soundproof studio for our office in the backyard. The investment in these improvements was substantial, but we were still comfortably under the valuation of our home before it was remodeled. Also, if we decide to sell in the future, our remodeled home should sell more quickly and at a premium compared to non-remodeled homes in our neighborhood.

Now, we still live in our great neighborhood. We still have our friendly neighbors, our gym is still around the corner, and Veronica can still easily leave me in the dust on the backtrails. And we live in a home that we love and brings joy every day.

Honestly, the only regret is that we didn’t do it sooner.

Remodeling using your home’s equity might be the best choice for your family.

Remodel Reason #1 - You should love where you live.

Have you ever walked into a space and felt more calm and relaxed? Maybe it was at a spa, a hotel, or a Smith House remodel. :)

Or have you ever been in a place that makes you feel on edge and stretched thin, like an emergency room waiting area? The spaces we inhabit can drastically alter how we feel. If a house is cluttered and dingy, filled with mundane materials chosen by a builder to maximize profit rather than joy, it can leave you feeling low, uninspired, and embarrassed. On the other hand, a home purposely designed for you and your family, with bright, cheery rooms contrasted with quiet, contemplative spaces, and built with care using materials, hardware, and furnishings that inspire and delight, can make you feel more upbeat and optimistic, ready to make a positive change in the world.

Life is short. Why not live in a home you love?

Remodel Reason #2 - You can use your homes increased value to your advantage.

If you bought your home before 2020, you've likely seen a significant increase in its value. Home equity lines of credit and home equity loans (HELOCs and HELOANs) are excellent ways to use your increased equity to finance a remodel without altering your original mortgage. While 2% interest rates are probably not coming back for a while, a higher interest HELOC can be paid down quickly, allowing you to take advantage of your home's appreciation.

Remodel Reason #3 - It’s an investment that provides immediate and future returns.

Return on investment always seems to come up in remodel discussions, and I get it, but it's also sort of weird because people usually don’t talk about ROI with other quality of life investments that impact their lives much less than their home. For example, I love splurging on a great dining experience, but I never think, “I wonder what kind of recuperation I will see from this investment.” The return is in the experience. In the joy I get from great food, a great atmosphere, and great company. Yet, when we talk about investing in the spaces in which we spend most of our lives, all of a sudden we become Warren Buffet. But we aren’t flipping homes and trying to maximize returns.

We are creating a space for you and your family to call home. A place that reenergizes, inspires, comforts, calms, and heals. There is no greater return on investment than that.

But for you finance majors out there, you can rest easy knowing that the equity in your home usually more than covers the cost of the remodel, and because you remodeled, the resale value of your home increases as well. It’s a win-win. You get to enjoy a home that has been expertly crafted for your family now, and will be able to enjoy a higher market value and quicker turn time if you decide to sell in the future.

You should love where you live. We can help!

If you are ready to transform your cookie-cutter house into a place that truly reflects who you are and helps you live a better life, fill out that contact form today! We would love to hear from you.

Till next time,

JS