Tax Return or Equity for Home Remodeling?

Everyone during tax season always seems to moan and groan, but in reality, most Americans get some sort of tax refund back. According to the IRS, last year the average tax return mid tax season was over $3,000! That is a lot of money that can be easily put back in the home.

However, as we know, remodeling is going to cost more than just $3,000. An easy way of getting more additional cash is to refinance and pull equity out of the home. To find out how much equity you can pull out of your home all you need to do is estimate the value of your property by recent sales in the area and multiply the value by 0.85 and that is the total loan amount you can use.

For example:

Home Value: $200,000

$200,000 * 0.85 = $170,000 total loan amount

Let’s take a look at some common remodeling:

Kitchen = $20,000 (average price)

Bathroom = $9,000 (average price)

And a full remodel of the home can cost over$60,000

All of these are quite expensive and although a tax refund can help pay to get it started, in order to pay for the expenses, pulling equity out of the home is easiest way to accomplish your goals.

Written by: Seth Reinhard, Loan Advisor at Royal United Mortgage LLC

Published: 3/3/2016