5-budgeting-tips-for-home-renovationsThinking of re-doing your kitchen or bathroom? Maybe you’d like to add a home office or new bedroom to your home. Whatever your home renovation goals are, staying within your budget can be tricky. Luckily, we’ve got 5 helpful tips to help you better plan for your home renovation projects.

1. Estimate costs

In order to keep from overspending, follow the renovation rule of thumb – you should spend no more on each room than the value of that room as a percentage of your overall home value. For example, bathrooms and kitchens usually account for a higher percentage of the property value than bedrooms. Also, it’s important to keep in mind the renovations with the highest and lowest returns on investment. It may surprise you to learn that kitchen renovations are among the lowest return on investment, while bathrooms offer the highest.

2. Consider loan options

If you have many renovations in mind and are planning to borrow money for the project, be sure to speak with your lender right away, as well as what type of loan best matches your needs. Home equity loans are a good option unless you need to access money over a period of time to aid ongoing home improvement jobs – then a home equity line of credit (HELOC) may be a better option.

3. Get quotes from contractors

Be very specific with contractors on what you want done to your home, including the materials you’d like to be used. This helps provide a more accurate estimate of the renovation costs, instead of allowing the contractor to fill in the details which is almost always more expensive. Talk with multiple contractors and compare estimates – be careful to examine the lowest priced estimate to ensure no corners are being cut.

4. Stick to the plan

Once the project is in play, it can be tempting to add on additional small projects or change your materials to match the latest design trends at the last minute. However, these “small” changes can add up quickly, drastically increasing your project expenses. Instead, try to stick with the original contract as much as possible.

5. Account for hidden costs

At first glance, your home may seem flawless but there could be issues hiding beneath the surface. Hidden imperfections are one of the top reasons that renovation projects end up costing more than anticipated. To help prevent any last-minute woes, factor in 10 to 20 percent (or more) of your contracted budget upfront for any surprise expenses that can – and usually do – occur.

Be sure to conduct some research on contractors before inviting them into your home.  Talk to friends in your area, visit the Better Business Bureau online and look for online reviews. Careful planning and preparation are key functions in executing a successful home renovation project.

  • By: Draper and Kramer Mortgage Corp.
  • In: Housing, Tips
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