Home renovation projects are exciting. But before getting caught in the excitement, you should make sure your home renovation budget is in line with your plans. It is very easy to run wild with all the great ideas you have been pining over from the photos you see on Houzz and Pinterest. But it is just as easy to overspend and wind up further in debt than you intended to be.
Why Set a Budget First?
Knowing upfront how much you can afford to spend on renovating your kitchen, living room or whatever room you choose is important. The first step before even contacting a contractor is to begin setting your home renovation budget. This helps your contractor assist you with setting realistic expectations of what you can do with your renovation.
Understand the Value of Your Renovation
Crunching the Numbers
As you begin to start number crunching, consider what you want to accomplish with your remodel. Do you want more counter space in your kitchen, or are you updating your home to sell in the near future? Determine your wants/needs and negotiables/non-negotiables.
Knowing what you want to accomplish with your renovation will assist your contractor in determining what materials and finishings will be involved with your renovation. Your contractor can then work off your list to give you a somewhat accurate idea of what your costs will be and whether it is in line with what you can afford to spend.
Most contractors will also advise you to add anywhere from 10 to 15 percent to the amount to account for unforeseen expenses. It is not uncommon for a contractor to open a wall during a renovation and find there are issues that need to be fixed that were not originally included in your estimate.
How Will You Pay for Your Remodel?
After determining what your home renovation budget will be, the next step is to figure out where you will get the funding from unless you have the cash already in the bank to pay for it. Before approaching a lender for a loan, make sure that your credit is in order. Having good credit is important for finding the best deals on interest rates because lenders will view you as less of a risk.
Here are a few options to consider for funding your room renovation:
- Home-Equity Line of Credit (HELOC)
- Home-Equity Loan
- Mortgage Refinance
- Personal Loans
- Credit Cards
Investigate which type of funding will work best for you and give you the best terms for repayment, including interest rates.
Sticking to your home renovation budget will help ensure you won’t find yourself running out of money before your project is completed. With Alair Homes, that process is easier. Our transparent way of doing business keeps you informed and involved about all costs for your project. If you’re in the market for a home renovation, contact us to schedule a complimentary, no obligation consultation.