3 Ways To Master The Art Of Budgeting For Home Renovations
Whether your home is showing signs that it is time to replace the pipes or you want to expand your home to grow with your family, renovations are a necessity if you are a homeowner. In fact, a stunning 7 in 10 homeowners have renovation plans this year, according to the latest Lending Tree survey. However, before you begin contacting contractors, drawing up plans for your dream kitchen, or even planning a timeline for your impending home renovations, there is a key issue you need to address: financing and budgeting. Around 1 in 3 home renovations end up going over budget. To avoid this, homeowners need to budget their renovation finances skillfully and pragmatically.
Be Clear And Realistic On What It Costs To Renovate A Home
A common mistake many homeowners make during a renovation: they do not create a detailed and realistic budget. The first step to budgeting accurately for your home renovations is getting real-time and real-world estimates. The value of your renovation budget will vary according to the nature of renovations. If you need estimates on the true average cost of renovations, try looking at HomeAdvisor’s True Cost Guide. According to Dan DiClerico of HomeAdvisor, “A broad rule of thumb is that you should spend about 5 to 15 percent of your home value on a kitchen renovation.” It is also a great idea to add a 10 percent buffer to your budget for additional costs or unexpected delays. Don’t forget to factor in supplementary costs like the cost of material waste disposal, hotel or Airbnb accommodations, and permit application fees.
Look For Ways To Cut Renovation Costs Without Compromising Quality Or Safety
If there are ways to cut unnecessary costs during a renovation, consider it. Renovations can quickly get expensive and time-consuming. Therefore, finding the areas you can save money during a renovation can help you cut down on labor costs and speed up the timeline. One way to cut the renovation costs is to opt for click and collect instead of home delivery for your renovation materials. Most stores will offer this for free. You can also choose to reuse materials in creative ways across the renovation. For instance, you may be able to reuse your old kitchen cabinets as bathroom storage. However, don’t be fooled by the lower prices but focus on efficiencies and long term savings too. A good example is the comparison between washing machines where top loading machines can be cheaper but also cost more to run.
Line Up Your Financing Ahead Of Time
Now that you have an idea of how much your home renovations will cost, it is time to work on how you will finance it. There are a few quite popular financing options for renovations like the use of refinancing and the use of a home equity loan. While the appeal of secured loans lies they do offer lower interest rates, refinancing often means you need to restart a new mortgage term. By doing this ahead of time, you get time to secure any additional financing if there is any shortfall in your credit financing like supplementing your renovations with a credit card or savings. It also helps you to plan the timeline of your renovation to better align with affordability.
Lastly, be prepared to revisit your renovation budget regularly throughout the process. Regular check-ins on how well you are sticking to the budget gives you more time to adjust and react to unforeseen costs. In the end, you are left with a home renovation you can enjoy and a final cost your budget can handle.
