The reasons for a home addition are as varied as the homeowners themselves. Whether an additional garage for the second car, an in-law suite for the growing family, or simply a bigger kitchen. Often, the only limits to your desires are financial. Find out here, how high the costs of home addition can be, how to pay them, and why a home addition might even be financially worthwhile for you.
Home Addition Costs
A home addition typically costs $80 to $200 per square foot, although the price can be significantly higher for particularly luxurious additions, of course. According to HomeGuide, the average American spends about $128 per square foot on their home addition.
A basic extension usually only budgets for additional living space or bedrooms with only necessary wiring and no plumbing or gas. Most homeowners add on such a standard extension. With that, it already is possible in most cases to install reasonable insulation that will keep future heating costs down.
When it comes to a bathroom or kitchen, installing a sewage system is possible, too. As the budget increases, so does the quality of materials. In addition, it must be remembered that each additional window, partition, or door brings additional costs.
How to Calculate Home Addition Expenses
Thus, even with inexpensive materials, an elaborate addition with an extra roof can easily exceed $100 per square foot. Considering that real parquet on a square foot can cost as much as $20-50, it is easy to understand that costs can vary greatly depending on preferences.
In addition, there are other factors to consider. Especially if you plan building-out or building-up and if so, what kind of contractor you use. Nevertheless, an average price range gives you a hint for expenses of upcoming remodeling projects.
|Quality||Cost per Square Foot|
|Basic||$80 – $100|
|Average||$100 – $150|
|High-Quality||$150 – $200|
|Luxury||$200 – $1,000|
Estimated Costs for your Home Addition Project
The cost per square foot should then be extrapolated to your individual project. With an average expense of $100-150 per square foot, the following projections can be a guideline for your future home addition.
|Square Footage||Average Costs|
|100||$10,000 – $15,000|
|150||$15,000 – $22,500|
|200||$20,000 – $30,000|
|300||$30,000 – $45,000|
|400||$40,000 – $60,000|
|500||$50,000 – $75,000|
|1000||$100,000 – $150,000|
Room Addition Costs
There are many ways to make the most of your square footage and there is a solution for every need. You can turn the unused space under the roof into a bedroom, add living areas or garages from the outside, or even add a complete floor.
However, for all major remodelings and additions, you should get direct assistance from professionals or a contractor. When adding a new room to a home, the cost is directly related to your plans for that new room. A kitchen will always cost more than a living space. How important particular additions are depends entirely on your individual needs. Some square footage additions however may even be financially worthwhile for you. Therefore, we will take a look at possible financing options and ways to maximize the return on investment (ROI).
How to Pay for Home Addition?
How you will finance the home addition depends on the size of the project and your financial situation. The most economical solution would be to pay for such renovations from your savings since no interest accrues this way. Unfortunately, this option is usually not possible for most homeowners. Therefore, it is necessary to look at alternative financing possibilities.
Personal Loans for Remodeling or Home Repairs
Such personal loans for home renovation are offered by almost all banks, credit units, and online lenders. The advantage of these loans is that they do not require collateral. So you do not lose your home in case of emergency.
Instead, you qualify with your credit score. In addition, they are often very fast and flexible, so that you have the money in your account after only one day. Since personal loans usually have low fees and short terms, they are especially suitable for small or medium-sized home additions.
Home Equity Line of Credit (HELOC)
A HELOC, on the other hand, is secured with the equity of your home. This means that you usually have lower interest rates compared to a personal loan, but at the same time, your home is at stake.
Furthermore, a HELOC is a revolving loan, which means that you only pay interest on the money you actually withdraw. This makes it especially suitable for longer-lasting remodeling projects.
A cash-out refinance only works if you already have a mortgage on your home. It replaces this mortgage with a new, higher loan and the difference is paid to you in cash. You can then use this difference for home additions. However, handle this loan with care as it comes with high fees and other closing-related costs.
Home Equity Loan
The home equity loan is also known as “second mortgage”. Like a HELOC, this kind of loan uses the equity of your home as collateral. Again, this means fairly low-interest rates. The difference, however, is that you get the money paid out as a lump sum. This loan is especially suitable for large one-time remodelings. It is important to be sure that you can pay the monthly payments, otherwise, your home is in danger.
Increase Your Home’s Value With Additions
Just about all home additions of extra space increase the value of your home. But some projects have a higher return on investment than others.
For example, while an additional bedroom recoups about 50 percent of the investment cost through increased value, an in-law suite can have an ROI of up to 100 percent. An additional bathroom or a second story addition is also well ahead with a recoup of 60 to 70 percent.
Whichever home addition you decide on: From a financial point of view, there are a few things to keep in mind. It is important that the changes do not clash with the style of the rest of the house or your neighborhood. If the house is sold at some point, the numbers are not the only things that matter, so does a coherent appearance. Therefore, the advice of an experienced contractor is enormously important.
In the end, of course, it all comes down to what you want. You need to feel comfortable and enjoy your home addition.
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.