No matter what we’re shopping for, few of us like sticking to a budget. But when you’re doing a major home remodeling project, knowing precisely how much money you have to spend and staying within that budget is crucial.
“As contractors, we design our projects to our clients’ budgets,” says J.P. Ward, architect and vice president of business development at Anthony Wilder Design/Build in Cabin John, Md. “Homeowners need to know what their budget is upfront and be realistic about what they can afford.”
Considering a big home renovation? Here’s how to set your priorities, establish a spending limit and stick to your budget.
Determine your goals
The first question you have to ask yourself is why you want to renovate, says Ridley Wills, owner and design director at Wills Co., a design-build firm in Nashville. Are you remodeling your kitchen because you want more counter space? Do you want to create an open floor plan? Are you tired of not having enough space to entertain guests? “Figure out what your goals are and then figure out your budget,” Wills says.
Drill down to specifics
Before you start crunching the numbers, decide on what details you want, says Tom Miller, a Portland, Ore., home remodeler and president of the National Association of the Remodeling Industry. “The biggest consideration is pinning down decisions and selecting materials and finishings before the job begins,” he says. “That gets you to a reliable budget.” For example, do you want hardwood floors or carpet? Black or stainless-steel appliances? Providing a contractor with a list of exactly what you want can help you formulate an accurate budget.
Assess your financing options
Unless you’re going to pay for all remodeling expenses with cash, you’ll need to borrow money for the project. One option is to obtain a home-equity line of credit (HELOC), which allows you to borrow money on an as-needed basis, up to a certain limit, using the equity in your home as collateral. You’ll receive an introductory rate for the line of credit that can change after a set period of time.
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