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Budgeting 101 For Home Renovation
So you’re getting ready for a home renovation? It can be messy, stressful and financially taxing for your family. Sorting out a proper budget can be challenging and sticking to it can be even harder. Don’t lose hope though, there are the obvious upsides like having a beautiful space to relax in, not to mention gaining value on your home. We’re going to help make the renovation process as quick and affordable as possible so you can enjoy your dream home.
The best way to get started in a home renovation is to get inspired by what you love. Websites like Pinterest and Houzz are great for idea gathering for finishes and details you might want to incorporate. This will help give your potential designer an idea of what your style is and eliminate the guesswork.
You need to be able to organize and track your expenses effortlessly. Getting bogged down in crumpled receipts and numbers is no way to start your remodel. Make a custom spreadsheet in a program like Excel so that you can have your budget on hand on all of your devices. Make sure to go over this with your contractor so you’ve got all the necessary items in place from the start.
There are many incredible apps out there to help you keep your renovation in check. Try the Handyman app that tracks all of your expenses and allows you to easily take room measurements. Another great tool is the Pro Project Planner app, you can use this to track your budget and help to manage your project and timeline. It organizes all of your expenses into easy to use graphs and charts to make tracking easy and convenient.
Expect The Unexpected
Any renovation can bring unexpected surprises, especially if you’re dealing with an older home. If that’s the case be prepared to run into hiccups. You never know what you might find when you start ripping up old flooring or walls.
When organizing your budget make sure you leave yourself a contingency for unaccounted costs. It’s a good idea to save anywhere up to 30% of your renovation budget as a healthy buffer. Otherwise your reno might run into a screeching halt if you run into an unforeseen problem.
Need help? Here are 21 great tips to save on your remodel from This Old House. It just might save your budget and some stress.
What Is Your Budget & Will You Need A Loan?
A large number of homeowners will spend more than they originally planned on a renovation. Unorganized planning, unforeseen issues or upgrades can all push the budget over the edge.
If you’re like most prospective home renovator’s you likely won’t have cash up front to pay for your renovation. There are tons of loan and financing options available, it just takes a bit of research to find which option is the right one for you. Here is a list of some of the basic options:
- A high interest credit card is not the way to go unless you have the finances to pay it off immediately.
- In a cash-out refinance you are essentially remortgaging your home. You take out cash for your project and your mortgage payment will go up accordingly.
- A home equity loan allows you a one-time borrow from your financial lender using your equity as collateral. The loan is determined by the appraised value of your home.
- A home equity line of credit is similar to a the home equity loan. The difference being, you borrow a fixed rate amount on a credit-like system. The life of the loan does expire and is set with your financial advisor.
Need help finding the best financial institution and loan option? The Simple Dollar lists the best options for 2017.
Get More Than One Quote
If you’re trying to save money this step is a must! Ask friends and family for trusted references before you choose a contractor. Take your time to find someone that is going to work with you and get multiple quotes before settling.
We’ve all heard the term “you get what you pay for.” Of course you want to save money but don’t skimp out on a good contractor. They’re not revamping your wardrobe, their revamping your home. Make sure it’s done right the first time. The same goes for your designer, don’t just choose the first one who has a pretty portfolio. Ask questions and ask to see current work projects, make sure you can endure a renovation with said person.
Evolve With Your Remodel
Will items be more expensive then you thought? Yes! Will your timeline change? Yes! Will you continuously be thrown for loops and have to be an expert decision maker? Yes! In reality your renovation is not going to run like a half hour remodel episode on HGTV. Behind the scenes nightmares do happen. Prepare yourself the best way possible if you don’t have the guidance of an expert designer.
If you start straying from your budget look for other alternatives. Laminate instead of granite or hardwood. Get savvy with your design.
- DIY (do it yourself) – What skills/time can you put in to cut labour costs.
- Vintage Pieces – What items can you keep temporarily or refurbish so you don’t have to purchase new?
- Painting – Taking on simple finishing work like painting can be a huge cost savings.
- Cut square footage – Is decreasing your project scope doable? Anything helps!
Stick To The Plan
Some large renovations can last months, even years. Your tastes may change and you may decide you want the newest design trends available. This can quickly test your budget. Keep in mind that every small change will cost you and try to stick to what was originally planned. If need be work with your designer to see how you can cut costs elsewhere.