Are you ready to finally renovate that bathroom? Or are you itching to update your kitchen?
Well, finding a new project for your home is the easy part. Budgeting for the project is where things get tricky. Let’s look at some tips to help you budget for a home renovation.
- Estimate Costs
There’s a simple rule of thumb when it comes to budgeting for home projects: Spend no more on each room than the value of the room as a percentage of your total home value.
For example, a kitchen makes up 10 to 15% of your home value, so if the home is worth $200,000, you should spend about $30,000 or less on remodeling that room.
- Consider a Loan
Do your homework if you are considering taking out a loan for your project. For example a home equity loan might be suitable if you have a one-time project. Now, if you need funds over an extended period of time then perhaps you can look into a home equity line of credit.
- Get Contractor Quotes
When you work with a contractor, you need to specifically outline what you want done, how you want it done, and even what materials you want used in the renovation. You may want to get several estimates, and it is not recommended to automatically work with the contractor who has the lowest bid.
- Stay on Track
It can be very tempting to get sidetracked from your original plan and want to add new elements to the project. We encourage that you stay away from deviating because these changes can break the budget.
- Account for Overhead Expenses
It is a safe bet to have at least 10% to 20% of your budget to put towards unforeseen expenses. Even though your home may appear ok, unforeseen expenses are the main reason that home renovations exceed the contracted amount. You’ll be glad you tucked this money away upfront!