How To Increase Home Value: 11 Top Tips

Reasons To Improve Home Value

Increasing your home value takes work. It’s not a spectator sport. Given that, let’s start by going over a few reasons to do this that might provide a little extra motivation:

• You can sell your home for a higher price. If your home really is worth more based on the appraisal, you can sell it for a higher purchase price and be sure the value is going to appraise at or near the agreed upon amount. Selling the home is the way you would realize the profit from your investment in the property.
• You can increase your home equity faster. Equity in your home is a function of not only your loan payments, but also the value of the home itself. The bigger the difference between your existing mortgage balance and your home value, the more you can use your equity for home improvements, debt consolidation or whatever goal you might be looking to accomplish.
• You can potentially cancel private mortgage insurance on a conventional loan. If you make a down payment of less than 20% on a conventional loan, you have to make PMI payments until you reach 20% equity in the home. If you make substantial home improvements, you can request a new appraisal of your home and possibly have PMI payments removed early. The exact equity requirements needed on the reappraisal may depend on the investor in your mortgage, your number of units and how you occupy the home.

How To Add Value To Your Home

When it comes to adding value to your home, there are several things you should consider. We’ll start with a couple of basic things you can do to make sure your home looks as good as it can before we go into improvements that can be made to bring you back the highest possible level of return.

1. Declutter The Interior

It’s a little counterintuitive, but one way to increase your home’s value is to get rid of what you don’t need. Downsizing a home doesn’t necessarily mean that you have to live in a smaller house; sometimes it’s about decluttering to make your existing space feel bigger. Open concepts remain a popular trend among home buyers.

When the home buyers are walking through your home, you want to make sure they can navigate easily and visualize themselves in your space. Sometimes that’s about minimizing your footprint by removing furniture you don’t use and digitizing pictures. If you’re looking to move, this will be less to pack up anyway.

2. Clean The Outside

First impressions are everything, and when potential buyers come to look at your house, the first thing they’ll notice is the exterior. It never hurts to clean it up. Take care of that yardwork you’ve been putting off. Rent a pressure washer and remove those years of dirt and grime that have built up on your siding. Give your windows a scrub, inside and out.

3. Consider A New Paint Job

Depending on your taste in paint colors, you may want to make a change and go neutral when you’re looking to sell. Contrasting colors isn’t a bad thing, but if you have painted your house in a way that’s an homage to Jackson Pollock, you may choose to tone it down for the open house. Additionally, a fresh coat of paint in general can give a house new life.

From a practical perspective, you may need new paint if you have cracked or peeling areas in houses built before January 1, 1978. Because of the prevalence of lead paint being used prior to that time, not repainting or otherwise mitigating the issue may cause you to fail an appraisal for a potential health hazard. Being proactive upfront can stop delays later.

4. Increase The Home’s Energy Efficiency

A survey conducted at the end of 2023 by Rocket Mortgage^® showed a strong preference among home buyers looking to buy in the next 5 years for various energy efficiency features in their homes. These can include new windows, energy-efficient LEDs and insulation to save money on heating and cooling bills.

Among those polled, 35.7% stated they would like to see energy-efficient windows, while 35.6% prioritized an energy-efficient HVAC system. Solar panels were also sought after by 25.3% of respondents. Don’t just take us at our word. Studies show a premium of up to 8% on the sale price compared to homes that aren’t Energy Star-certified.

5. Add Some Square Footage

One of the biggest things you can do to increase the value of your home is to increase the square footage. This adds to the usable space in your home and can be really attractive. Some common things that people are always looking for extras of our bedrooms and bathrooms, but you could also expand the kitchen and family room spaces if you’re looking at home additions.

It’s important to note that if you’re looking to calculate square footage, rooms must have flooring, covered walls and ceiling and the option to live in it year-round if someone wanted, meaning having the ability to heat the space if necessary.

6. Improve Your Curb Appeal

We’ve talked about how initial impressions matter, so upgrading the curb appeal of your home can make a lot of sense. These don’t have to be big upgrades. Things like fixing cracks in a sidewalk or driveway can go a long way. Maybe you put flowers on the porch or put up a few birdfeeders. Painting your front door a contrasting color could make it pop in photos.

7. Install Smart Technology

From both a convenience and an energy-efficiency standpoint, smart home technology is all the rage. Our home buyer preference study from earlier also showed that 24.6% of buyers would like a smart thermostat, 17.5% of them would enjoy smart lighting and 15.5% of respondents wouldn’t mind a smart entertainment system.

In addition to the convenience factor of being able to control lights, thermostats and other appliances from your phone or with your voice, some of these devices can be tied together and use machine learning to adjust to your habits, which could lower your energy bills. There are also other appliances like smart ovens and smart refrigerators that can cook food to the right temperature or alert you before you run out of a family favorite.

8. Remodel The Kitchen And Bathroom

The kitchen and bathroom are two of the most functional spaces in any house, so having things that appeal to buyers or even your own personal use can be very important. Some of the most obvious upgrades may be appliances, tubs or more luxurious shower spaces. But not everything has to be a major expense.

In both rooms, storage space is important, so consider your cabinets, whether adding more or just replacing aging hardware. Next up might be sinks or countertops, along with backsplashes. If you’re looking to spend a little more money, tile or flooring will be a big-ticket item, but you may see the payback in your enjoyment or a sale.

9. Put In A Pool

If you live in a northern climate, having a pool at your home to access during the summer can certainly set you apart among your neighbors when it comes time to sell. In warmer areas where the mid-summer heat can be oppressive, it may be a must-have for some. Price can vary, depending on the pool surface material as well as whether it’s inground or aboveground.

In addition to the installation costs, there is long-term maintenance associated with treating the water periodically and having it covered or uncovered.

10. Add A Deck Or Patio

It’s easy to get hung up on interior living space, but the exterior can be just as valuable for entertaining when the weather permits. Having a deck or patio can give you extra room to hang out, play games and wine and dine guests. While a grill is common, you can also upgrade to a more full-featured outdoor kitchen space. A porch swing may be great for reading or catnaps.

11. Construct A Garage Or Shed

What Else Makes Property Value Increase?

Although so far we’ve discussed maintenance and home improvements as primary ways of increasing home value because you control these, it’s important to be aware that other factors also play a role in determining your property value:

• Location: Do you live on the water, on a golf course or near the ski slopes? Factors related to the location of your land can be a big deal to some buyers.
• Market activity: If there’s more demand in your area for homes, particularly those matching what you have, you could see your property value go up. It’s important to take into account both local and national migratory patterns in evaluating your home value.
• Interest rates: As mortgage rates fall, the effective budget of home buyers increases. Based on this, your property value may naturally rise if the offers on homes rise as a result.
• Real estate comps: Real estate comparables are homes with similar characteristics to your own that have sold recently, usually within the last 6 months. If homes with features like yours are selling for higher prices, you can reasonably expect your home might see a value increase as well.
• Zoning regulations: Zoning regulations deal with what can be built or done under local law. If zoning restrictions make it more difficult for builders to construct new home inventory, the value of your home may go up based on there being limited supply. On the other hand, too many restrictions can also turn off buyers.
• Age and condition: The age and condition of the home also play a major role because homes that are new were in better shape may have higher values than those that are older and may need more work done to maintain livability.

Paying For Renovations That Increase Home Value

There are various costs associated with home renovation that depend on everything from the scope of the project you’re doing to the prices of labor and materials in your area.

The cost of things like fixtures and appliances, countertops and the like are the first thing everyone thinks about, but you should also factor in the cost for someone to actually do the work. Permits may also need to be pulled depending on what you’re doing. Here are some ways to finance your projects.

Personal Loan

While a personal loan isn’t the least expensive form of financing we’ll talk about here, we do want to touch on this first because you don’t have to touch your home equity when using a personal loan. Home equity may not be an option if you’re looking to sell shortly.

The good thing about personal loans is that the funding can be as quick as same day because it’s based on your own personal credit history. You don’t have to wait for collateral to be appraised. Our friends at Rocket Loans^SM offer personal loans up to $45,000 with 3- or 5-year terms.

Cash-Out Refinance

A cash-out refinance involves accessing your home equity by taking a bigger balance on a new primary mortgage. You’ll need a fair amount of equity to do this because most major mortgage types require that you leave at least 20% equity in the home after the transaction. So you need to make sure that given that restriction, you can convert enough equity to meet your needs.

If you qualify for a VA loan, you may be able to cash out up to the full value of your home. The other thing to consider is whether to refinance your existing mortgage or to do a home equity loan or home equity line of credit (HELOC).

We’ll go over the specifics of home equity loans and HELOCs below, but one of the keys is to have a Home Loan Expert take you through a blended rate calculation.

Based on the amount you’re borrowing, they do a weighted average to see if you get a lower rate by keeping your existing primary mortgage and doing a home equity loan or HELOC, or by doing a cash-out refi. If the calculation shows that you get a lower average rate by taking a home equity loan than the rate you get by refinancing, you do the second mortgage. Otherwise, you should refi.

Home Equity Loan Or HELOC

Home equity loans and HELOCs offer another way to access your home equity if you don’t want to give up a lower rate on your primary mortgage. Both of these are second mortgages that have slightly higher rates than you would receive if you were to refinance in primary mortgage.

Still, if the blended rate calculation shows it makes more sense to do a home equity loan or HELOC and have two payments rather than do a cash-out refinance, this is the way to go. Two payments should be easier to handle if the total cost of the financing is cheaper.

Beyond rate considerations, the other reason to consider a home equity loan over a cash-out refinance would be because you can access more of your equity. Rocket Mortgage allows qualified clients to access up to 90% of their equity between the primary and secondary mortgages.¹

The most important difference between a home equity loan and a HELOC is the structure of the financing. A home equity loan can have a fixed or adjustable rate, but you get the money in a lump-sum payment as you would with a cash-out refinance.

With a HELOC, there’s a draw period that works like a credit card where you only owe interest and can put the money back to access it again. Then the balance freezes during the repayment period and you make installment payments based on the full principal and interest.

Rocket Mortgage doesn’t offer HELOCs, but we do offer Home Equity Loans.

Credit Card With 0% APR

If you can find and be approved for a credit card with a high enough limit, some credit cards have a 0% annual percentage rate (APR) introductory period that lasts for a short time when you first open your account. Done right, you could charge everything to the card and pay it off without interest before the introductory period expires.

There are a couple of drawbacks to be aware of, one from a practical financing and one from a risk perspective. First, this may not work if the limit that your approved for is lower than the cost of what you’re trying to get done.

The second and bigger issue is that you should make sure you know you can pay off the balance before the introductory period expires. If you can’t, credit cards have some the highest interest rates of any financing you can get because the balance changes every month and it’s like a constant rolling short-term loan. Paying off the balance avoids interest charges.

The Bottom Line: Find The Best Ways To Increase Home Value

Whether you’re looking to make money in a sale, access more of your equity faster or eliminate PMI, there are plenty of good reasons to want to increase your home value. These could be as simple as decluttering and putting on a fresh coat of paint or as complex as doing a remodel or addition.

There are a variety of ways to finance your home improvements, but if you decide a cash-out refi or Home Equity Loan are right for you, you can get started with Rocket Mortgage.

¹ Home Equity Loan product requires full documentation of income and assets, credit score and max loan-to-value (LTV), combined loan-to-value (CLTV), and home equity combined loan-to-value (HCLTV) ratios. Requirements were updated 2/5/2024 and are tiered as follows: 680 minimum FICO with a max LTV/CLTV/HCLTV of 80%, 700 minimum FICO with a max LTV/CLTV/HCLTV of 85%, and 740 minimum FICO with a max LTV/CLTV/HCLTV of 90%. Your debt-to-income ratio (DTI) must be 50% or below. Valid for loan amounts between $45,000.00 and $500,000.00. Product is a second standalone lien and may not be used for piggyback transactions. Product not available on Schwab products. Guidelines may vary for self-employed individuals. Some mortgages may be considered “higher priced” based on the APOR spread test. Higher priced loans are not allowed on properties located in New York. Additional restrictions apply. This is not a commitment to lend.