In a NutshellNew siding can add a significantly to your home value. But these projects can be pricey, and you’ll often spend more to replace the siding than you will gain in added value.
Sometimes all the exterior of your home needs is a new coat of paint. But in some cases, you might consider replacing the siding altogether.
Whether it’s vinyl, fiber cement, brick, stucco or some other material, your home’s siding is an important element of your house. The siding is part of what protects your home from wind and rain, keeps you warm in the winter and gives your home curb appeal.
High-quality exterior siding can last for decades, but eventually will need to be replaced. You may also choose to upgrade your siding to a more desirable material.
- Does siding increase home value?
- How to finance a siding replacement project
- What’s next: Is siding a good investment?
Does siding increase home value?
The short answer is yes. Replacing worn out, old or unattractive exterior siding on your home will generally add value. How much value generally depends on the type of material.
Fiber cement siding
Replacing your existing siding with new fiber cement siding (such as James Hardie products) may add as much as about $17,130 in value, according to the 2023 Remodeling Cost vs. Value report. The cost estimates assume you’re replacing about 1,250 square feet, with the new siding painted in the factory. This appreciation in value represents a roughly 89% return on investment.
Putting in new vinyl siding will increase your home value by about $15,490, according to the 2023 Cost vs. Value report. This also assumes that about 1,250 square feet of new siding is being installed and represents a 95% return on investment.
Manufactured stone veneer
Replacing a small (300 square feet) section of your facade with manufactured stone veneer will add about $11,180 to your home’s value, according to the 2023 Cost vs. Value report. This project has a 102% return on investment, making it one of the most cost-effective projects in the report.
How to finance a siding replacement project
Paying cash is generally the best and cheapest way to finance a home renovation project such as replacing your exterior siding. But since these projects aren’t cheap, that may not be an option for you.
You can consider one of the following financing options to add value to your home with new siding.
Home equity loan or HELOC
Home equity refers to the difference between what you owe on your mortgage and how much your home is worth. If you’ve lived in your home for a significant period of time, you may have built up a good deal of equity — and you can borrow against that value with a home equity loan or home equity line of credit, or HELOC.
A home equity loan gives you a lump sum and is paid back at fixed rates, with monthly payments that will not change. It’s commonly referred to as a second mortgage.
A HELOC works more like a credit card. You are given a set limit for how much you can borrow, and you can borrow as many times as you’d like up to this limit during your draw period. During this time, you often only pay interest charges on what you’ve borrowed.
At the end of the draw period, you pay back everything you’ve borrowed, plus interest. HELOCs generally have variable interest rates.
Both home equity loans and HELOCs are secured by your home, meaning you risk losing your home to foreclosure if you fail to make your payments.
A cash-out refinance allows you to take out a take out a new mortgage that pays off and replaces your current loan. Your new loan is for a larger amount, with the difference coming to you as cash.
Another potential refinancing option is the FHA Limited 203(k) loan program. These loans allow you to borrow a larger amount than you currently owe — up to $35,000 more — to pay for improvements to your home.
Credit cards can be a convenient way to pay for home repairs but carry significant risks. Interest rates on credit cards tend to be high, and you’ll want to compare those rates with home equity loans or personal loans.
If you’re confident you can pay the balance within a relatively short period of time, you may look into a credit card with a 0% introductory rate offer. These credit cards may offer to let you pay no interest for a limited period. But be careful: If it’s a “deferred interest” offer and you carry a balance beyond the introductory period, you’ll end up paying a considerable amount in interest.
A personal loan generally refers to an unsecured installment loan, usually paid back at fixed rates with a monthly payment that will not change. The amount you can borrow and the interest rate you will pay are typically dictated by your credit, income and existing debts.
Because these loans are usually unsecured, you don’t have to risk losing collateral (like your home) if you fail to make your payments. But missing payments can have a major negative effect on your credit score, and your lender could send your debt into collection.
- Title I property improvement loan — Title I home improvement loans are insured by the Federal Housing Administration, and may be a good option if you don’t have much home equity. You may be able to borrow as much as $25,000 to repair or improve your home. Loans less than $7,500 typically don’t require any collateral.
- Contractor financing — Some contractors may offer to finance your new siding purchase. They often use a specific lender, so be sure to ask which lender it is before signing up for this type of program.
- 401(k) loan — If you have an employer-sponsored retirement plan, you may be able to borrow from the amount you have saved. These loans may have relatively lower interest rates and no minimum credit requirements. But if you leave your job, you may be required to pay back the loan all at once. You also miss out on investment gains during the period you have the loan.
- State and local programs — You may also qualify for state or local home improvement loan or grant programs. These are often geared toward helping low-income families afford necessary repairs to their homes.
What’s next: Is siding a good investment?
Whether new siding is a good investment depends on your circumstances. You’re likely to spend more to replace the siding than you will add to the value of your home, so if you’re planning to sell the home right away, these projects may not be a good idea. At the same time, a home with siding in poor condition may be more difficult to sell.
If you’re planning to stay in your home for the long-term, quality siding will keep your home protected from the elements and give your home a well-kept appearance. If your home’s siding is nearing the end of its useful life, new siding can be a good investment.
© 2023 Zonda Media, a Delaware Corp. Complete data from the Remodeling 2022 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.