How Remodeling Your Kitchen and Bathroom Can Increase Your Home's Value
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Considering home improvements? Kitchen and Bathroom remodels yeild a high ROI.

Financial Advice


Articles and research about improving your home

Considering home improvements? Kitchen and Bathroom remodels yeild a high ROI.

Financial Advice


Articles and research about improving your home

Increase Your Home's Value: Kitchen & Bathroom Remodeling

Published March 23, 2017 Jim Baker

One of the great myths about a Home Equity Loan is that the money must be used for home improvements. Not true! You can use it for anything from funding a child’s or grandchild’s college education to getting plastic surgery – if you are going to use it to improve your home, a kitchen or bathroom remodel, it will be a very wise use of your money.

Why These Two Rooms?

There are very good reasons why kitchens and bathrooms are the perfect rooms in which to invest your remodeling money.

Heavy Use: No other areas of the house get so much use. Because they are worked so hard, they will show wear faster than, say, a guest room. Upgrading functional spaces such as a bathroom and kitchen can do much to improve your quality of life.

The Presence of Water: Because water is used extensively in these areas there is a greater likelihood of damage or mold accumulation than in other parts of the house. Refreshing these areas makes sense not only from an appearance aspect, but for health considerations as well.

Technological Advances: Innovations and technological leaps forward are constantly being made to appliances and fixtures. As your home ages, you may find yourself using devices that are completely out of date in settings that are noticeably out of fashion. Your Home Equity Loan will allow you to undertake both the cosmetic and functional upgrades that will brighten your mood every time you use them.

Resale: Kitchens and bathrooms sell houses. If you are planning to sell your home, a minor kitchen remodel on a mid-range priced home is one of the more cost-effective home improvement projects you can do. If you plan on staying in your home for many years, you can choose your designs to fit your personal tastes. If you plan on moving soon, go for a more timeless and basic look.

Do The Project Right

Know your costs before the project begins while understanding that overages are to be expected. Always budget an extra 10 to 20 percent to cover unexpected surprises such as pipes that need to be replaced or rotten drywall, studs or flooring that are revealed when the project gets underway. There are many steps you can follow to make sure your project comes out right and that you get the most out of your Home Equity Loan. Here are some helpful hints:

For Kitchens: If you’re completely gutting the kitchen, you have a chance to make it over in a way you prefer. Always have a professional sign off on your ideas and help you come up with a comprehensive plan. Make sure your new kitchen is ergonomic and user-friendly. Determine how much counter and storage space you want and plan accordingly. Consider little extras like a swing-out, “pot-filler” tap over the stove or under-the-cabinet lighting. You can save money by having your existing cabinets refinished or repainted or adding new knobs and drawer pulls. If you’re installing an island where there wasn’t one before, make sure its presence leaves enough room to move.

For Bathrooms: Try to find a balance of function and form that fits your lifestyle. While you want your bathroom to look great, you also want it to be laid out properly so you get the most out of the space available. The nicest finishes aren’t always the easiest to maintain or the safest to walk on. Be sure you have done your homework on what is best for you.

Resale Values:

Midrange Home

Project ROI
Minor Kitchen Remodel 82%
Major Kitchen Remodel 70%
Bathroom Remodel 69%
Universal Design Bathroom 69%
Bathroom Addition 57%

Upscale Home

Project ROI
Major Kitchen Remodel 63%
Bathroom Remodel 60%
Bathroom Addition 60%

Getting Your Priorities Straight

So that you don’t exceed your budget or fall short of your expectations on your kitchen remodel, there are several criteria you should use that will help dictate the direction you’ll take. Before committing to a plan, ponder the following:

  • Number of people using the kitchen?
  • Amount of daily use?
  • Will the kitchen be the focal point of much entertaining?
  • How serious about cooking is the user?
  • Is this a baker’s kitchen?
  • How important is the look of the space – or is its functionality more important?

Choose Your Pros Wisely

One of the best sources for a contractor recommendation is a friend or family member. If you find yourself admiring their new bathroom or kitchen, ask them who did it and how they were to work with. When you engage a general contractor, make sure you have a signed contract and a firm expectation of when the work will be done. Because these are areas of daily use, be prepared to be inconvenienced for the life of the project.

The Home Equity Loan Advantage

Because you are using your home as collateral, you are unlikely to find a better interest rate than you’ll be getting on your Home Equity Loan. Your loan might also be tax deductible1 (check with a tax professional). To find out how much equity you have in your home or to get started today, click below.

1. Home Equity: APR is Annual Percentage Rate. Loans Subject to approval. Combined Loan-to-Value (CLTV) cannot exceed 80% of your home’s value. Additional terms, conditions, and restrictions may apply. Amplify Membership and Property Insurance required.

HELOC: The home equity line of credit Annual Percentage Rate (APR) is variable and is based on the highest Prime Rate published each month-end in The Wall Street Journal Money Rates Table (the "Index"), plus a margin. The current Index is 3.50%. Maximum APR is 17.90%. This Account has a Draw Period of 10 years, after which you will be required to repay any amounts within a 10-year term. Interest on your HELOC may be tax-deductible – please consult your tax advisor for details. Property Insurance, including flood insurance as needed, is required. Loans Subject to approval. Additional terms, conditions, and restrictions may apply. Amplify Membership required. Consult the CFPB's Home Equity Line of Credit booklet as well as the Early HELOC Disclosure for more information.

Under Texas law, the maximum you can borrow with a HELOC is 50% of the fair market value of your home, as long as the combined loan-to-value does not exceed 80% in cases where there is an existing first lien mortgage on the home. A minimum draw amount of $4000 is required for each advance after the initial $10,000 advance at origination.

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