Budgeting and Financial Planning For a Minor House Reno
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Whether you want your dream kitchen or you’re looking into creating a bathroom oasis, you may be under the impression that the cost of a small-scale renovation will be relatively low. Many homeowners find that getting the renovation they truly want costs twice their current budget and end up settling for less to avoid stretching that budget. Instead of settling now and having to get your renovation redone in the future, consider borrowing to get exactly what you want. Here are some tips for properly budgeting for a minor house reno to avoid having to do it twice or settle for something you don’t really want.
No matter what method you choose for financing your renovation, it’s essential that you discuss your needs with a financial advisor. These professionals are able to evaluate your personal finances and advise you on the best way to get the financing you need for a renovation without stretching your budget too far.
Figure Out What You Really Want
The first step to planning for your renovation is examining what you really want. Are you hoping to add a patio to your backyard that is perfect for entertaining friends and family members? Maybe you want to expand your garage space. The most common renos that homeowners want are kitchen and bathroom renovations.
While you may not be able to afford marble counters or a glass shower with surrounding water jets, there are some features that you likely have in mind as must-haves. Before you even call for a quote, list out all of these must-haves to ensure that the scope of the project incorporates these items. When you’re spending thousands of your hard-earned dollars, you don’t want to settle.
Examine Your Budget
Many homeowners save up as much as they think the renovation will cost, failing to account for those extras or really evaluating the average cost of the type of renovation that they want. For example, you may have $5,000 set aside, but the quote for that patio that you want may come in near $10,000.
While some people decide to put off their renovation as they save more or downgrade the project, financing options are available. Homeowners may utilize financing to get exactly what they want now to avoid the financial burden and inconvenience of having to get a renovation done twice.
Explore Your Financing Options
Now that you know that financing is available for home renovations, it’s time to explore these options. Depending on the total price of your renovation, you may be able to take out a small personal loan. The interest rate on these loans will be dependent on your credit score.
Another option is to refinance your home to tap into the financial potential that you have built up in it. Banks will typically allow you to refinance up to 80 percent of the difference between the value of your home and the amount you still owe on it. For example, if you owe $200,000 on a home valued at $300,000, you may be able to borrow up to $80,000 through refinancing.
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