How do I budget for a home renovation?
Most homeowners want to put a personal stamp on their living space or increase its resale value at some point. But getting started on even a small renovation project can be daunting.
Coming up with a budget, let alone a strict one that can be kept to, isn’t easy. So to help you get started, we put together a guide on how to begin the process of planning your home renovation from start to finish.
1) Get your money in order
Before you can even think about budgeting for a home renovation, you need to know two things: how you’ll be paying for it and how much is too much.
Assess your financing options
How you plan on paying for your remodel can affect how much you’ll be able to eventually spend, so knowing your options upfront is step number one.
The most common way people pay for renovations is through a loan. There are several different types of loans available to those who are looking to renovate, so weighing them is an important step as each have their pros and cons.
If you’re paying in cash — something not many Americans can typically do — setting aside a specified amount of money over the course of several months or even years (if needed) can build your pool of available funds and get you ready to pay for your reno without dealing with banks or interest rates.
Assess how much is too much
Beyond available cash limits, another way to determine what your upper limit should be on your remodeling budget is by following the general rule that your renovation should fall within whatever 10-15% of your home’s overall value is.
The estimated value though should be balanced with considerations like the quality of the product, the estimated longevity of it and the look and feel of it — you will be living in it, after all, so you’ll want to be able to enjoy it.
These factors are important to think about when assessing how much to spend on your home renovation. Speaking to an expert contractor if you’re confused about how much is too much can also help you determine what needs to be done.
2) Determine your priorities
Determining which room or which elements of your reno will receive the largest chunk of your budget can help prevent impulsive, costly choices that can come from heat-of-the-moment decisions.
“The biggest consideration is pinning down decisions and selecting materials and finishings before the job begins,” Tom Miller, a home remodeler and president of the National Association of the Remodeling Industry, told The Washington Post.
We get that it seems extreme to conclusively make every single decision before demo day, but working out the prices of even the smallest details can help you create an accurate budget that clearly lays out what your renovation will cost. Factoring taxes and shipping costs into that detailed budget can also help prevent any unpleasant surprises upon project completion.
3) Save for overflow and emergency costs
According to PolicyGenius, nearly half of home renovations go over budget — so while it wouldn’t be a surprise if you go over budget, you can at least know to plan for it.
Save for the unexpected
Danny Niemela of ArDan Remodeling recommends that people budget for about 10-20% of their total budget as a cushion in the event that something goes wrong or unforeseen changes pop up along the way.
Having that cushion built in for unexpected events, whether good or bad, will not only make your home renovation experience less stressful but can help prevent your project from turning into a serious money pit.
Try not to deviate from the plan
While adding on the hardwood floors can seem like a great decision at the time, it can throw a wrench in your budget and your schedule. If your budget is top of mind, making sure that you stick to your plan once it’s made can go a long way in keeping your project under budget.
For peace of mind, bring your next project to LONG
Long Home Products offers a variety of financing and payment options to help make your home renovation dreams a reality. We even offer unsecured loans up to $75,000 through our special relationships with banks and lending institutions. Give us a call at 866-270-7058 or visit us online to speak to our product specialists and get the ball rolling on your next home improvement project.
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