How To Budget For A Home Renovation
A home renovation is a great way to make your home more function or even to add value. Here are a few top tips that you need to know about budgeting for a home improvement project before you start construction.
Lay Out Your Estimate Home Renovation Budget & Goals
Before you get started on a home renovation, it’s important to go over your budget and overall renovation goals. This can include putting together a wish list for the top 3 projects you are hoping to complete and outlining what you would need to spend on each to achieve your goals.
If you’re looking to build home equity than going with a bathroom might be your best bet, with a kitchen coming in second. Although you may think a kitchen remodel is the best in terms of ROI, but that will increase your value by about 50 cents for every dollar spent while a bathroom remodel will fetch you a little more. Now is the time to get estimates.
Get Home Reno Estimates From A General Contractor
Unless you have a trusted handyman, we highly recommend meeting with several general contractors to get estimates. This will give you a chance to meet them in person, talk about your project goals, hear their thoughts on your renovation ideas and get quotes.
Once you have the estimates back, it’s time to scrutinize them. Buying a shirt on sale might be great but be wary of contractors who are way cheaper than others. This could signal trouble. Look for a contractor who is moderately priced and can give you great references so that you can check out their work ahead of time.
Nail Down Your Final Budget
Once you’ve had the chance to review the quotes that you received, it’s time to nail down your final budget. A word to the wise, build in a healthy contingency of around 5-10% of the overall project cost. This might mean that you need to scale back on a few things or go for a smaller project on your to-do list, but ultimately it will save you from going over budget due to hidden renovations costs. If you own an old house, you might want to up your contingency even higher as you may need to upgrade electrical, plumbing or come into some other unexpected costs.
How To Stay On Budget
This one is fairly simple…stick to the plan. Nothing can derail a budget faster than making last-minute additions or changes to your home renovation plan. Do your research ahead of time and take your time laying out your final plans. This will help you to explore all your options fully and not end up making revisions.
Remember, every change you make costs you money and can delay your project by days or even weeks. And, each delay will add up as you will need to pay the contractors to be on-site even longer to account for the added timelines. Needless to say, if you stick to the plan and don’t make last minute changes then you should be smooth sailing when it comes to staying on budget.
Financing Options For Home Renovations
Many homeowners opting to do some more pricey renovations look to home equity loans. Simply put, these loans allow you to borrow against the equity in your home in the form of a line of credit. For more information on a home equity line of credit, check out our guide to home equity loans.