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A home renovation requires that you budget carefully. It is very easy to exceed a renovation budget, so plan ahead and track your spending to ensure you stick to what you can afford.
Get preapproved for your loan.
If you plan to borrow money for your renovation, the first thing you should do is get preapproved for your loan. This can be a home equity loan, a home equity line of credit, or refinancing your first mortgage to take cash out. Whatever you decide, talking with a lender lets you know how much you can afford, and what your monthly payments will be. Use this amount to start setting your budget, remembering that you don’t have to spend it all!
Assess your needs.
The next step in setting your renovation budget is to know what your needs are. Make a list of all of the projects you want done, prioritizing them so you know your must-haves from your nice-to-haves.
Shop around.
Whether for loans, contractors, or materials, you need to shop around to find the best deal. Using LendingTree® allows you to compare loan offers, making it easy to shop around for your renovation loan. Make sure to interview several contractors for the home renovation, and compare prices on materials. Whether you choose high-end, mid-grade or low-cost materials can have a big impact on your budget.
Try to do it yourself.
You can make your renovation budget stretch further by doing all or some of the renovations yourself. If you are unsure about the project, you can take classes at a local home improvement store or get direction from a book. The more that you are able to do yourself, the more you are likely to save. However, beware of over-extending yourself. It is much more costly to attempt a project yourself, find out that it is way beyond your abilities, and then have to pay a contractor to correct your mistakes. Stick to doing what you are able to yourself, and hire someone for the rest.
Pad your budget.
Expect the unexpected. Prices of materials can increase. You decide you want to rethink your design after the project has been started. Add at least 10 percent to the estimated cost of your project so you have enough money to cover unexpected expenses, which are sure to arise. Also, don’t forget the costs associated with moving out or storing furniture during the renovation, as these costs can add up.
Step 2: Paying for your renovation.
Next step: Finding a contractor and architect.