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Bathroom Remodel Financing

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by | Apr 2, 2021

Bathroom Remodel Financing

Why remodel your bathroom? 

There are many reasons you might choose to remodel your bathroom. Maybe you want to open up the current layout. Maybe you want an upgrade because you’re thinking of putting your house on the market. Whatever the reason, there are plenty of options to finance your bathroom remodel project. 

 

How much does a bathroom remodel cost?

 The cost of a complete bathroom remodel is dependent on many factors. It depends on the location of your home, the size of the room, the materials used, the fixtures you choose, and even the current floor plan. The price of your remodel weighs heavily on the square footage of the room. The average price per square foot is $125. The average price for a bathroom remodel is $10,735, with a typical range from $6,119 to $15,368. A master bathroom remodel will average a higher price because of the size and layout. The average price for a master bathroom remodel is $18,000.

 

Materials Price

 

Item 

Average Price Range

Bathroom Fan

$50 – $300

Lighting

$100 – $400

Painting

$150 – $550

Fixtures

$200 – $1,800

Countertops

$200 – $1,000

Flooring

$200 – $1,350

Doors & Windows

$200 – $1,800

Plumbing 

$250 – $1,450

Showers

$300 – $3,000

Vanity

$300 – $3,800

 

These prices do not include the price of installation and labor. Labor prices will fluctuate depending on the location of your home and size of the remodel. 

 

Labor

 The price of labor will typically make up 40% to 65% of your bathroom remodel budget. The average range for cost of labor $50 to $75 per hour. If hiring professionals you will most likely need a contractor and a plumber. You might also want to consider hiring specialists such as an electrician or an interior designer. 

 

Installation Costs

 The table below will highlight the installation costs of common bathroom fixtures. These prices are average ranges and include the cost of materials and labor. 

 

Installation 

Price

Toilet

$340 – $480

Lighting Fixture

$1,100 – $1,700

Sink

$1,400 – $2,300

Flooring

$2,500 – $3,600

Bathtub

$2,600 – $4,100

Countertops

$2,800 – $4,100

Shower

$3,000 – $4,800

Cabinets

$4,700 – $7,000

 

Permits

If hiring a contractor, you won’t need to worry about obtaining permits, as that will most likely be included in the price of the remodel. However, if you are planning to DIY all or a portion of the remodel then you might need to think about getting permits. Building permits average $350 to $1,800. What permits you might need will vary on your location and the current building codes. 

 

Options for Financing a Bathroom Remodel

1. Personal Loan 

A personal loan can be a good option when you are not liquid enough to pay for a project in cash or do not yet have enough equity in your home to leverage for a complete bathroom remodel. A personal loan is a type of installment loan. This type of loan is typically paid back in 12-84 months so it can offer a lot of flexibility. A personal loan can be a good option for someone with good credit or a good relationship with their bank or credit union. This type of loan does not require that you put anything up as collateral so you do not need to worry about a lien on your home as long as you make your payments. Interest rates for personal loans can be lower than those for credit cards or other types of loans. Interest rates for personal loans can range from 5 to 32 percent depending on credit and loan length, while credit card interest typically averages 18 percent. Generally, the better credit you have the lower the interest rate will be. One thing to keep in mind with personal loans is that the better your credit, the lower your interest rates will be. 

 Prepayment penalties: Some lenders don’t charge prepayment penalties, meaning you can pay off your loan early and decrease the amount you pay in interest.

2. Home Equity Loan

A home equity loan can be considered a second mortgage. A home equity loan allows you to borrow a lump sum of money using the equity you have built in your home. A typical repayment for a home equity loan is between 5 and 30 years. 

You can calculate your home’s “loan to value” ratio by dividing the amount you owe by the value of your home. For example, you owe $150,000 on a home worth $300,000. That’s $150,00/$300,000 = 0.5 or 50 percent loan to value. This means that you have 50% equity in your home. After calculating your home equity, compare it to your lender’s maximum LTV ratio to see if you qualify for a home equity loan. After confirming that you may qualify for a home equity loan you can calculate how much you may borrow by multiplying the value of your home by the maximum LTV of the lender and subtracting your mortgage balance.

 

Pros & Cons

Home equity loans are great for people who want to fund home improvement projects because the interest you pay will be tax deductible if the money is used for renovations, according to BankRate.

 

Home equity loans offer competitive interest rates when compared to other options.

 

Pros

Cons

Low interest rates

Closing costs can be expensive

 

Fixed monthly payments

For those who want to pay it off fast, they have longer funding timeline than personal loans

Interest may be tax deductible 

Risk of losing your home if you are unable to make payments

 

Home Equity Loan vs. Home Equity Line of Credit (HELOC)

Both home equity loans and HELOCs are secured against the value of your home equity. However, a home equity loan is a lump sum of money and a HELOC is a revolving line of credit, similar to a credit card. 

 

A HELOC may be harder to secure than a personal loan or home equity loan therefore you need good credit and a high LTV ratio. 

3. Credit Cards

Credit cards are always an option for financing home improvement projects. However, credit cards are likely to be the most costly option when financing your bathroom remodel. Moreover, the interest rates will likely be higher with credit cards, making them harder to pay off over time. Credit cards can be obtained regardless of credit issues and therefore can be the most flexible option for a broader range of credit histories.

 

Top reasons for a bathroom remodel remodel

 

Upgrade For Style

 According to a 2019 Remodeling Impact Survey conducted by the National Association of Realtors (NAR), the top reasons homeowners decided to remodel their bathroom were 1) to upgrade worn out surfaces, finishes and materials, and 2) to update their bathroom according to their home’s style. If you are thinking of putting your house on the market in the future, it is a good idea to have cohesion with the style of your home. 

 

Increase Home Resale Value 

A remodeled bathroom is a good selling point to prospective buyers. According to the NAR, 40% of realtors suggest a bathroom remodel before selling. A remodeled bathroom gives the impression of a brand new house. Updating showers, tubs, and fixtures is a great way to draw in prospective buyers. 

 

Other Factors to Consider:

 Materials

There are many options when it comes to materials and fixtures in a bathroom. You get to decide on the types of flooring, the countertops, shower head & tiles, and more! While this may seem like a lot of decisions it means that you really get to make the space your own. 

The type of materials you decide to use will also factor into the price of your remodel. If you choose to use lower-end materials, you will pay less for materials and labor. If you choose mid-priced materials you will pay more for materials but around the same for labor. If you choose high-end or custom materials you will most likely pay more for materials and labor. 

 

Style

Upgrading your bathroom for style is a great decision. In the short-term, you will get to enjoy your newly upgraded, luxurious bathroom. IIf you are just remodeling with the idea of putting your house on the market, look at current style trends and see if any would fit with your current space.

 

Functionality

 When thinking about how you would like to upgrade your bathroom, consider updating the layout. Depending on how old your home is, the current layout might not be the best for a wide range of people. Consider, opening the space up by moving around the vanity or bathtub. If possible, you might like to add windows or a skylight for more natural lighting. A very popular remodel option these days is to convert your bathtub/shower combo into two stand-alone units, or one of each. In the Remodeling Impact Survey conducted by the NAR, 35% of homeowners who remodeled a bathroom reported better functionality and livability. 

 

Renovating vs. Remodeling

If you are not ready to commit to a full bathroom remodel, a renovation might still be of interest to you. A renovation consists of sprucing up fixtures you already have in your bathroom. A renovation could look something like a new paint job and refaced cabinets, or a new shower head and resurfaced countertops. The overall layout of the bathroom will remain the same.

A renovation is a good option if you do not have a lot of time before you plan on putting your house on the market. A remodel takes more time and resources than a renovation. For a remodel, you will need to hire at least a contractor. For a renovation, you might be able to do a lot of the sprucing yourself. It all depends on the time, money, and commitment you are willing to put into your bathroom. 

 

Planning

Much of the work you will personally be putting into a bathroom remodel project is planning. As there are many decisions to be made for a bathroom remodel, planning is a very important and time-consuming aspect. If you don’t really know where to start with the planning, consult with a contractor and let them know your ideas. They will tell you how plausible and how expensive your initial ideas are and you can adjust from there. 

 

Would a bathroom remodel increase the value of your home?

 Yes. A bathroom remodel will almost always increase the value of your home. Adding new fixtures, countertops, and adjusting the layout are just some examples of ways to get the most value out of your remodel. Prospective buyers are always interested in a nice bathroom. A bathroom remodel is a great way to draw in buyers. Obviously, the longer you wait to put your house on the market after a remodel will decrease its value. The sweet spot between a bathroom remodel and putting your house on the market is about six months to a year. If you want to wait longer than that, it would be a good idea to retouch a few spots that may look worse-for-wear. 

 

Average ROI for a Bathroom Remodel

The average ROI for a full bathroom remodel is 57%. Therefore, if you spend $10,735 on your bathroom remodel you should be able to recoup $6,120 on the project. 

 

Conclusion

Is it really worth it?

Homeowners are often very satisfied with any kind of remodel projects. Remodeling projects are great because of how much say you get in the project. By remodeling your bathroom you really get to make the space yours. If you are remodeling with the idea of putting your house on the market, a refreshed bathroom is a great selling point. So overall, yes it’s worth it!

 

References

https://www.homeadvisor.com/cost/bathrooms/remodel-a-bathroom/#upgrades

https://cdn.nar.realtor/sites/default/files/documents/2019-remodeling-impact-10-03-2019.pdf

 

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