Staying within a budget is crucial for planning a house remodeling! This is how to face it.
Considering a big home renovation? Here’s how to set your priorities, establish a spending limit, and stick to your budget.
Determine your goals
This is really important. You need to know where you want to get to set the goal. Are you remodeling your kitchen because you want more counter space? Do you want to create an open floor plan? Are you tired of not having enough space to entertain guests? Figure out what your goals are and then figure out your budget.
Drill down to specifics
Write down exactly what you want, every item, then there will be time for you to change your options for a cheaper one according to your budget.
Assess your financing options
Unless you’re going to pay for all remodeling expenses with cash, you’ll need to borrow money for the project. One option is to obtain a home-equity line of credit (HELOC), which allows you to borrow money on an as-needed basis, up to a certain limit, using the equity in your home as collateral. You’ll receive an introductory rate for the line of credit that can change after a set period of time.
Alternatively, you can apply for a home equity loan, where you receive a lump sum upfront, typically at a fixed interest rate, and pay back the loan in monthly installments.
Consider resale value
If you’re thinking about selling the home within a few years, focus on your potential return on investment. Your return on investment is largely based on what your house is worth.
Get a 'hard' quote
Although most home contractors will give you a free estimate for your renovation, you generally have to pay money for a “hard” quote, where you’ll receive a detailed outline of the project’s costs and the timeline for the job. If you’re looking to stick to a budget you’re better off signing a fixed-price contract, where you pay the contractor a set lump sum for the project upfront.