This blog is part three of our seven part HELOC series that will run through March 2019. Please visit the first blog in the series here, and return each month to view our latest addition to the series.

The two rooms that most date a house are the kitchen and bathroom. They’re also the two rooms most homeowners desperately want to update. Unfortunately, these are the two most expensive rooms to remodel. So how will you finance your dream?

When it comes to making home improvements, a HELOC is your best friend!

Beauty and the budget

A beautiful bathroom can come with a hefty price tag. Prepare yourself for sticker shock. The national average for a large master bath is $21,000. For such a small room, a bath costs a pretty penny! The cost per square foot makes it the most expensive room in your house.

That cost can put a remodeling project out of reach for many homeowners. By the time the mortgage, insurance, car payment and monthly expenses are paid, a bathroom remodel can be too much to pay for with the funds you have on hand. So where can you find the money?

If you’re tempted to dip into your emergency fund—don’t! And never max out your credit cards to finance a remodeling project and leave your 401(k) alone! A HELOC is a better option to finance a bathroom remodel. Use your home’s equity to increase your home’s equity!

How HELOCs work

Here’s a general rule of thumb to figure out how much of a line of credit you might qualify for: Calculate 80 percent of your home’s assessed value and subtract what you still owe on your mortgage. In brief, the higher the value of your home and the more equity you have in it, the higher your possible line of credit.

It’s good to have a rough idea what your credit limit might be before you apply for a HELOC. You can compare your potential line of credit to your estimated budget for a bathroom remodeling project or an additional bathroom. The time to bring your budget in line with your credit limit is before demo day!

A HELOC, because it’s a line of credit, offers great flexibility. Draw only what you need, when you need it, to finance your project. That way you only pay interest on what you actually borrow.

4 smart ways to use a HELOC for a bathroom remodel

Using a HELOC to finance a remodeling project is a smart way to add value to your home, but there are plenty of ways for a bathroom remodel to go wrong. Taking the time to find a reputable designer and contractor can save you time, money and frustration.

  1. Upgrade a bathroom to increase your home’s value. Not every upgrade automatically adds value to your home. If your only issue with the bath is outdated finishes, by all means, upgrade if you can afford it and you plan to stay.
    While your new bathroom might make you happy, don’t expect to recoup the full cost of your renovation. But if your bathroom remodel is for health and safety reasons, you can expect a strong return on investment.
    You should definitely consider using a HELOC to address issues of mold from cracked tiles or water-damaged subflooring. Don’t forget to bring outdated electrical wiring up to code, too. Using a HELOC to bring your bathroom up to current standards will help you maintain both your home and its value. That’s smart!
  1. Add an additional bathroom to increase your home’s function. If you live in an older home, chances are you only have one bathroom. Using a HELOC to add a second bath is a smart move. You’ll not only alleviate family conflicts in the morning rush, you’ll increase your home’s value.
    When you’re putting your house on the market, realtors recommend adding a second bath over remodeling an outdated but functional bathroom. Most buyers desire a second bathroom. Newly updated might be appealing, but two baths are always better than one.
    Carefully consider where to add that second bath. If your home lacks a master bath, this should be your first consideration. If you have a multi-level home, provide a bathroom on each floor. Consider adding a powder room for guests or a half bath to a lower level family room, so no one needs to run upstairs.
  1. Remodel your bathroom to improve accessibility. For the elderly, modifying a bathroom can mean the difference between living independently at home or having to move.
    A smart decision in remodeling for accessibility is to ditch the tub for a walk-in shower. Showers not only address accessibility issues for the elderly, they also appeal to Millennials. Younger buyers prefer walk-in showers to bathtubs. So when your house goes on the market, you’re bathroom remodel will pay off handsomely.
  1. Remodel to ready your house for the market. First, a caveat: make sure the roof and foundation are in sound condition. Buyers won’t care that the bathroom has a steam shower if the basement or roof leaks. All they will think about is the expense of major repairs. Buyers would rather take on a bathroom remodel that reflects their taste than to sink more dollars into the basic structure of the house.

When to splurge

When you intend to stay, you don’t need to focus on what’s hot in the housing market. Allow yourself some of the luxuries you’ll appreciate every day. Go ahead and indulge in a heated towel rack. It feels extravagant, but a warm towel during our Michigan winters—you could get used to that!

What’s worse than bare feet hitting cold tiles fresh out of a hot shower? Pamper your feet with heated flooring. Perhaps your idea of splurging is a multi-head shower with steam. When you’re remodeling your forever home, you’ll have years of enjoyment.

When you’re putting your house on the market, you need to pay attention to the latest trends. Just be strategic spending extra dollars on your remodeling project. If your neighborhood justifies using marble in the bathroom, then shell out the funds for the upgrade.

Do be careful not to upgrade your house beyond what the market will bear. You want your house to sell. There’s a delicate balance between offering what buyers are looking for and what buyers are willing to pay for.

Quit dreaming

You’ve been dreaming long enough! It’s time to start taking action. Take your wish list to a bathroom designer and start interviewing contractors. It’s time to firm up your plan and get your estimates on cost. It’s time to quit exploring ideas and settle on your choice of tiles and fixtures.

Now is the time to come talk to us at United Financial. Armed with knowledge about financing and the newest trends in remodeling a bathroom, you’re ready to apply for a HELOC. You’re just a phone call away from turning your dream into a dream bathroom.