How To Plan The Budget For A Major Renovation Project
If you are thinking about home renovations, the easy part is not actually to know all you want. It is much more difficult to know exactly how much can be afforded. If you are thinking
If you are thinking about home renovations, the easy part is not actually to know all you want. It is much more difficult to know exactly how much can be afforded. If you are thinking about renovating, you need to properly plan your budget. In order to do just that, here are things that have to be remembered.
You need to know how much the remodeling dreams you have would cost. Generally speaking, the major upgrade like a room addition or a bathroom remodeling will be up to $200 per 1 square foot. When using a designer or a contractor, you want to get a rough idea on the associated costs.
How Much Needs To Be Spent?
After getting a rough outline of the project, you need to see if you have enough money to go through with it. When using cash, this is really easy to figure out. When you borrow money, you need to see how much the banks are going to offer and exactly what loans will add to monthly expenses. The main loan types you normally consider are:
- Cash-out refinancing
- Home equity loans
- HELOC – Home equity line of credit
HELOC is usually the very best option that is available. This is basically a loan that will be secured through home equity, meaning that you get lower rates than with the other loan options. Deducting interests on taxes is something that becomes possible through this type of loan. You will not get a lump-sum so you simply use money as you need it.
The interest for the month is normally the minimum HELOC payment required. You do not need to go over that. HELOC is advantageous since you can easily end up repaying when you can instead of being forced to always make payments. Basically, the repayment schedule that you will have is the one that you set up.
Before you will seek for bids, you need to determine all that you want. This includes small details like the kitchen countertop material or the faucet type. As you specific such details during the negotiation phase you get to receive quotes that are as accurate as possible from the contractor.
When looking for contractors you will need to get some recommendations or you need to at least look online for recommendations. Try to have recommendations from the people that you actually trust. See what the recent work done is, check many references and see as many contractor reviews as you can find online. As an extra tip, you need to add around 20% to the bid from the winning contractor as contingency. You never know when some unforeseen charges and problems appear.
Trim Budgets Based On Priorities
Budgets and dreams are not always in alignment. You will want to scale down till the level at each you are satisfied. Enlist contractors for cost cutting suggestions so that you can basically end up sticking to the budget. Trimming everything can be done in various ways, including:
- Using low cost alternatives is always a really good idea. As an example, instead of granite countertops you can use laminate.
- Keep some old items instead of replacing them.
- Buy items yourself instead of having the contractor do it – this can even save up to 20% of the costs.