A home renovation is an exciting endeavor, but the process of finishing one is not only exhausting but also quite costly.
If you’re interested in starting a home renovation project but are having problems with the budget, here are some tips that can make it easier to establish an accurate budget.
1. Understand your renovation needs
When you renovate your home, many ideas about what changes to make can come to mind. However, renovations cost a lot of money, so you should consider which parts of your home need that renovation more than others. Knowing which renovations you will spend money on is more straightforward.
Once you’ve chosen the part of your home that you will renovate, you should look at the minute details and start narrowing down further which aspects are necessary and which aren’t.
For example, you want to make your bathroom look gorgeous while increasing its practicality. An upgrade to your showers and water fixtures might be OK, but steer away from the raised sinks. These raised sinks look pretty and unique but are challenging to maintain, prone to chipping, and cause more splashes.
There may be a case where all of your renovation aspects are practical. However, there are some things that you can do at a later date over other renovation projects.
An example of that would be if you wanted to renovate the kitchen. Your goal is to get more counter space for cooking, so your priority is a new island and replacing your kitchen appliances. But if your current appliances still work well, you can focus on that new island instead.
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2. Research the average cost of the project
What’s excellent about cost projecting for your renovation project is that other houses have already most likely done a similar project. Therefore, you can always look into some of the many similar projects and see how much they cost them to do.
There are many avenues to find cost projections for your renovation project. The most common way to do that is by getting a cost estimate from the contractors you hire to do the renovation for you.
That’s also a great way to shop for the right contractors to help you with the project. Just remember that cheaper doesn’t always mean better.
Another group of people that you can talk to would be people within your network. Ask friends, family, coworkers, and neighbors who you think might have done some renovation work in their home.
They might even refer you to reputable contractors if you consult your network, so you don’t have to shop around.
On the other hand, if you’re doing the renovation yourself, you should also shop for different hardware stores to know how much the materials will cost. You can then consult the list to understand where to source the materials you use for your project.
3. Determine overall budget limits
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Now that you know the average project costs, you should determine the limits of your budget for the project.
While you might have an ideal goal for what your home renovation is supposed to look like, you should be realistic. Not only should you be aware of your financial limits, but you should also be aware of the limits that your set budget will be able to provide for your renovation project.
Consider not only the cost of the materials but also labor, permits, and even emergency funds. Your previous average project cost should help you determine the average costs to expect for your project so it is easier to figure out a realistic budget limit.
Remember that there will likely be lapses and emergencies afterward that can lead to additional costs for your project. It would help if you remembered to have enough financial cushioning so you don’t end up with a renovation project that gets stalled because you don’t have the budget to complete it.
4. Request quotes from different contractors
If you’re not planning on working on the renovation yourself, you would likely need to hire contractors to finish the project. Therefore, as you’re computing your budget, make sure that you factor in the labor costs.
You should shop around for different contractors and get a quote for the project you plan to get. To get as accurate an estimate as possible, you should be precise when describing the renovation project you want.
Otherwise, the contractors would give you a general cost estimate, and once the project finishes, it will cost much more than their estimate.
Indicating the materials you want to use and the specifics of the project details will make your project estimates much more accurate.
Once you’ve compiled a list of contractors, it’s time to make your choice. As mentioned earlier, don’t forget that just because it’s cheaper doesn’t mean it’s always better.
5. Explore various financing options
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If you don’t want to fund this renovation process directly from your savings, you should explore your financing options before committing to anything. Some options available to you would be a cashout refinance, a home equity loan, a home equity line of credit (different from a home equity loan), and refinancing in general.
Do note that you need a relatively good credit score, most likely to be able to take out these financing options.
If you’re in debt, getting financing options for your home renovation might be more complex, but you can consult experts in debt, such as those in Money Max, to know your options. You can check Money Max account reviews to see if their expertise applies to your financial concerns.
You should ensure that your repayment strategy is achievable when you take out these financing options. Otherwise, you will be taking on a financial burden that will limit your financial capabilities.
6. Assess estimated costs with your budget
At this point, you should have your assessed estimated costs on average and the budget limit you’ve dictated. Now is the time to compare them to one another.
If everything you want to do falls comfortably within your budget with free financial room, you can proceed with your project. However, you should reduce the project scope before moving forward.
You can reduce the project costs in several ways. You could change certain project materials to a less expensive alternative. Another option is to lower the coverage of your renovation projects.
7. Establish a contingency fund
As mentioned earlier, your budget should also account for a contingency fund that will cushion your project if some things are costlier than you thought. Another aspect that could cause an unplanned expense would be if the project takes longer than usual.
The ideal range should be 10% to 20% of your budget, which should be the contingency fund, but if you’re worried about the costs increasing, you can expand that financial cushion.
Conclusion
These tips should all ensure that your renovation projects go smoothly or at least won’t have hiccups too much because of poor financial decisions. Read through these tips before you start a renovation project to ensure that you will have an accurate budget and that you’re ready for the costs of your project.
