1. How long do you plan to live in your current home? If you consider it a "starter home" and intend to move eventually, take that into consideration. Updating to enhance the marketability of your home should be done only if the improvements are likely to net you a return on the cost. It is best not to renovate in too personalized a fashion, so that potential buyers can picture themselves in it.
2. How is the neighborhood and how is the school system? If the crime rate is high, or if there are many foreclosed homes in the area, property values will be affected. And the educational system is critical, even for those without children. Good schools attract new buyers and help to grow the community.
3. It may be the case that you owe more on your home than it is actually worth. If you find yourself "underwater," then this might be the time to wait out the market until it becomes more robust. Renovating in the meantime will most likely add value to your house in the long run.
4. Although it is an added expense, it's a good idea to get your own home inspected. This will help you to determine what is in need of repair in your home. If you've got an older home, you may find issues with the plumbing or wiring, and basements may have mold from leakage. Word to the wise is to leave such matters to licensed professionals.
5. A key issue for homeowners is how much money is in the budget. If the allotted amount isn't overly abundant, it may be a good idea to complete some of the basic work on your own, since hiring professionals tends to be quite costly. Be judicious about how ornate you make your home; if you do sell it one day, the renovations may not net you the money you put into it.
All told, even if you decide not to sell your home at this point, you can still make changes within your budget to improve it. It's your home, so you may as well make it your own little castle.
