Home renovations are not cheap and you're probably wondering how you're going to afford, budget, and pay for a remodeling job. Knowing how much you have to spend on renovations before you start the project can put you ahead of the game but like everything else, most people tend under budget for remodeling or renovation projects.
Most of the time a budget you have in mind may not get you as far as you think. If you are remodeling a kitchen for $30,000, you might realize after looking around that those upgraded cabinets and hardware literally could take up the entire $30,000. According to the Houzz Report, 46% of homeowners ultimately spent be on their budgeted amount for a home renovation.
Most homeowners are surprised by how expensive products, materials, and labor can actually be. And of course, the higher-end materials and appliances you choose, the higher your budget needs to be.
Before coming up with a budget shop around so you have an idea of how much things cost. You might love those really ornate cabinets but when you find out they cost $10,000 more than simple, standard cabinets, you might go back to a more traditional look.
If your renovation project involves a part of your home that hasn't been updated in a while, you might have other issues such as plumbing, dry rot, mold, mildew, leaks, or wiring issues. You might assume that a new countertop will be about $5000 but when you take into account labor costs, potentially relocating outlets, and of course, one thing always leads to another, your $10,000 budget goes fairly quickly.
Most homeowners don't want to take on additional debt to fund home updates. 85% of homeowners tend to leverage their cash or savings but with cash, it can be difficult to accurately budget from start to finish. You might get halfway through a remodel and run out of money.
For many homeowners, financing could get the project completed faster. You can take out a home equity loan, refinance, or a line of credit. Remember, this will increase the value of your home so pulling money out of your house only to put it back in makes wise financial sense. A HELOC, or a home equity line of credit, can serve as a revolving line of credit allowing you to borrow and pay off the amount as you need it. The preapproved limit is set by the lender based on the equity in a home.
You also have to consider labor costs. Are you going to be doing a lot of the work yourself or hiring out? A lot of homeowners choose to complete the demolition projects themselves and allow professionals to take over the installation. In this case, find where you can cut corners so that you can spend your budgeting dollars where you really want to.
So, first things first, figure out the type of renovation you want, shop around, get a good idea of labor, installation costs, and materials and then set a budget and then set that budget 10% higher than where you think you need to be. Trust me… You don't want to be stuck halfway through a project only to find out you'll need more money.