Paneling. Replace or paint?
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Oh boy, it depends on your budget. Of course if money isn't an issue I would do it right. Take down the paneling , inspect everything for any issues and redo. But if I needed a quick fix, paint would be the answer, KNOWING I would have to at some point take down that paneling.
Easy to paint, be sure to wash good and then prime before painting
Painted ours at least 20 years ago and first painted it with kilz and then white paint. Then about five years later we painted it light yellow.....still looks good.
It is really a judgement call. I would rather do sheetrock, but it is a big job, and you will probably have to redo all the molding. If paneling is in good shape, you can paint it. I got the idea from a relative, who painted a knotty pine kitchen. Ours was a rec room, and we painted it a nice off-white, and painted some built-in cabinet with pine louvered doors a colonial blue. It turned out much better than we had hoped for.
You might like pickling your wood paneling. It brightens up the area yet still has the character of the paneling. Pickling generates a modern look to freshen a room!
PAINT OVER IT!!!! It's not hard.