Are you a homeowner, ready to take advantage of this amazing market and refinance to do some renovations to your house? If so, you’re not alone. But this process can be costly, so you’ll want to make a plan and stick to it to avoid spending more than you plan. Read here on how to create a renovation budget.
The first thing you should do is decide which rooms/areas you want to renovate. The biggest return on investment areas are kitchen and bathrooms. If yours are already up to date, you may want to look into doing things that are less exciting, but still increase the value of the home. For example, a new roof and water heater are both necessary requirements of being a homeowner. But they don’t exactly knock your socks off. Still, if you think you could be moving within the next 5-10 years, these will be fruitful investments in your home.
If you’re not familiar with the costs associated with renovations, do some research. The average kitchen remodel is $80,000. Get more than one quote for the work and materials so you get an idea of cost beforehand. In some cases, you can save money by buying materials and appliances yourself. Although, your contractor may be able get you a better deal. You’ll also want to do some research on your neighborhood to get comps. This is to get an idea of the value of your home so you have that to compare to your existing loan.
Once you’ve done the research and you have an idea of what it’s going to cost you, stick to that budget. If you’re using cash, then it’s a pretty easy process. If you need a loan to do the work, you’ll need to speak to a lender. You may want to do a cash-out refinance, home equity loan, or a home equity line of credit (heloc).
Another great way to create a renovation budget and stick to it is by creating a spreadsheet. Make a list of all of the items in your renovation, estimated cost, and then actual cost. This will help you monitor the costs during the renovation and allow for adjustments if necessary.