Tips for Setting a Home Remodeling Budget

stack of money

Ready to make your home look how you always dreamed? Maybe you only need a few minor updates. Or perhaps you’d like to completely renovate an entire room, or maybe even the whole house. Knowing your home remodeling goals is the easy part. Unfortunately, figuring out the financial aspect can be a little more daunting. In today’s post, we’ll talk about how you can set a home remodeling budget. We’ve got some great tips that should help you stay grounded in your plans and avoid taking on more debt that needed.

Follow these steps to plan a realistic home remodeling or renovation budget:

1.) Know your home’s current worth

According to many experts, the amount you spend on each room should be no more than the value of that room as a percentage of your overall house value. As an example, home kitchens typically account for 10-15 percent of the property value, according to Josh Garskof of time.com. If your home is currently worth $150,000, then 10 percent of that would be $15,000.

2.) Get good estimates

Make sure you’re getting solid estimates from industry professionals when it comes to remodeling projects. You can easily get in over your head if you underestimate the scope and cost of remodeling. To ensure you’re getting a fair price, get estimates from a couple of different professionals. In other words, don’t automatically go with the first plumber, electrician or painter you speak with — they may be pricing their services higher or lower than everyone else in town.

3.) Consider a home remodeling loan

If you don’t think you will be able to pay for the cost of your home remodeling up front, there are loan options that may work for you. The FHA offers a home renovation loan option called a 203(k) loan, which can be used to finance certain improvements in a home. These loans usually offer low interest rates and low minimum down payments.

4.) Expect to go over, but stick to the plan as best you can

As you move along in your remodeling project, you may find that certain things wind up costing a little more than you originally expected. Some of this should be anticipated when you’re first making a budget. Whatever budget you come up with, go ahead and add an extra 5-10 percent for unexpected costs. This will give you a bit of a buffer and if you wind up not needing that extra money, all the better!

That being said, resist the temptation to add on extra “frills” throughout the process that you did not originally set out to include. This can drain your funds real quick and then when that integral piece of the project winds up costing more than you thought, you’ll be kicking yourself for adding stuff you didn’t really need.

 

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