Establishing a remodeling budget come first. Knowing what you want from a remodeling project is the easy part. You know you want to improve the home’s value, add office space or even make room for your growing family. Whatever the case, figuring out how to achieve your home renovation goals without breaking the bank can prove a difficult task. If this is an investment property renovation your goals may be different than if you are remodeling your personal family home. Below are key factors that will help you set a home remodeling budget.
💰 Ballpark home renovation costs
The first step is to get a handle on how much your renovation dreams will cost. The general rule of the thumb is that one shouldn’t spend more on each room than the value of that room as a percentage of the total value. For instance, if the house is worth $200,000 and the kitchen accounts for 10% of the value, then you shouldn’t spend more than $30,000 on renovations. This is why we want to know the remodeling budget before the job breaks ground. Consider discussing your project with a remodeling contractor to get a rough idea of the costs.
💳 How much do you have to spend?
The next step is to determine whether you have the money required to complete the project. If you are using cash, it is a no brainer. That may change if you are borrowing. Consider how much the bank will loan you and what this move will mean for your monthly expenses. There are three main lending options you can opt for i.e. home equity line of credit, cash-out refinance and home equity loan. A home line of credit is often the best option for financing home remodeling. This is a loan that’s secured by your home equity. It is has a lower than others and one can deduct the interest on their taxes. Refinancing is also a viable option for financing your renovation project.
📋Renovation quotes from contractors
Before seeking any bids, it is important that you identify what you want including the type of faucet, backsplash, and countertop material. Specifying such details upfront ensures that the contractors price the same items in their bids. Consider getting contractor recommendations from family, friends or anyone you trust. Make sure that you ask to see the recent work of prospective contractors and look at peer reviews before making a final decision. Once you decide on a contractor add 15%-20% for contingency. If you can still pay the total, you can get started.
⏰ Trim project to fit the Remodeling Budget
If your dreams and budget aren’t aligned, you will need to scale down your project. Consider discussing the project with your contractor as they will have suggestions on how to cut the costs. There are many ways to trim the renovation to achieve your dreams without breaking the bank. For instance, you can opt for low cost alternatives like laminate countertops instead of granite. Buying the materials and appliances will also save you some cash. Be sure to keep any appliances that are still in good working condition.
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