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Myrtle Beach Kitchen Remodel

3 Reasons to Remodel in 2018

Dreaming about a remodel can be fun. Browsing boards on Pinterest and Houzz, imagining a space in your home transformed. I constantly find myself watching home improvement shows thinking, what if we opened this space up, or what if we added an island and nook to the kitchen. You can remodel for added functionality or for simply an updated style.

But if you’re like me, you may find yourself doing a lot of dreaming of big changes or renovation without much action. Too costly, too disruptive, things are fine the way they are. But consider this: even if a remodel doesn’t give you a full return on investment, if it can increase your enjoyment of your home and make your property more attractive to future markets, it may be worth it. Plus, now maybe be the time to finally do it.

If you’re thinking about remodeling your home, 2018 is a good year to do it. Here’s why:

Reason to Remodel in 2018 #1: High Consumer Confidence

After some modest growth following the last big economic downturn and housing bubble burst, home prices and consumer confidence are high. According to the University of Michigan’s reports, 2018 is showing the highest readings for consumer sentiment since 2004. The highest proportion of households have indicated improved finances since 1998.

With low unemployment numbers and a low projection for inflation, 2018 is a great time to invest in your home. Dan Bawden, chairman of the National Association of Homebuilders and Remodelers, says, “remodeling decisions are made by families based on their consumer confidence.” With a strong and growing economy and optimistic projections, now is a good time to do home improvements—remodeling costs are not likely to get cheaper.

Reason to Remodel in 2018 #2: Home Equity Loan Deductions Haven’t Gone Away Yet

With the recent tax overhaul bill (Tax Cuts and Jobs Act) in 2017, many feared that the home equity loan deduction—the rule that allowed you to deduct mortgage interest—would be going away in 2018. In fact, the new law suspends the deduction for interest paid on home equity loans and lines of credit from 2018 until 2026.

However, there is good news: the IRS has interpreted the bill a little differently than anticipated. If homeowners use the proceeds of a home equity loan to buy, build, or remodel your “qualified personal residence,” they are still deductible.

Here is an example from the IRS of how this will work. Example 1: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home with a fair market value of $800,000. In February 2018, the taxpayer takes out a $250,000 home equity loan to put an addition on the main home. Both loans are secured by the main home and the total does not exceed the cost of the home. Because the total amount of both loans does not exceed $750,000, all of the interest paid on the loans is deductible. However, if the taxpayer used the home equity loan proceeds for personal expenses, then the interest on the home equity loan would not be deductible.

In short, as long as the equity loans are used for remodeling, you will be able to deduct interest from those loans. To learn more, the Motley Fool did a great breakdown on the tax changes with multiple hypothetical scenarios.

Reason to Remodel in 2018 #3: Mortgage Rates Will Likely Keep Rising

Did you know that there are mortgages for home renovations? Fannie Mae Homestyle and FHA 203(k) are to mortgage loan types for doing renovations.

But it’s not all good news. The days of sub-4% mortgage rates are over. The best rates are somewhere near the 4.5% as of March 2018, and they appear to be climbing. According to Realtor.com, some experts predict rates will climb toward 5% by the year’s end.

Of course, this is all relative. Ten years ago, anything under 5.5% would have looked good. The Mortgage Reports, a site collating mortgage rate expert predictions offers some good news: rates are still good, especially looking at a historical average of 8%.

If you’ve been on the fence about a mortgage, now is the time to act. Waiting just a year could mean you’ll pay more for the same home or major renovation.

Odom Design Can Transform Your Home with a Custom Remodel

Malcolm Odom and team bring decades of experience to custom design and build projects in and around Myrtle Beach. Get inspired with our Pinterest boards curating inspired kitchen remodel projects. Let’s chat and discover new ways that you can enjoy your home at the right price for your budget.