New Home? How to Budget for Remodeling
According to Forbes, realtors report that one of the most important things people look for in a home is its location with respect to their work, local interests, and lifestyle. This is why it’s common for buyers to purchase a home in a neighborhood they love even if there are a few parts that the home lacks.
Republic West Remodeling has helped many clients who have found themselves in this predicament. These clients bought a home that had a few outdated elements at a discount with the plan to invest in modern renovations after the purchase. If you’re one of these homeowners who wants to make renovations in your new home, how do you budget for home remodeling?
1. Figure Renovations into Your Total Home Cost
Before you buy a home, your loan officer or lender pre-qualifies you for a certain amount. While many people like to hit the ceiling of this amount to get the fanciest house possible, buyers who plan to renovate should figure in the cost of remodeling into the total price. With this method, you can use the difference to make improvements that will ultimately bring your future home to a higher value after improvements.
For example, if you are prequalified for a line of credit of $700,000, then find a home at $620,000 so you can the $80,000 you would have spent on the home for renovations. The good news is that these renovations will contribute to your home’s value.
2. Use Your Home’s Value
If you are on a budget for a home remodel, your property’s value can help. If you have patience, you can live in your home for a few years and pay down your home loan. As the gap between what you owe and what your home is worth increases, you can borrow against your home’s worth. When you cash out with a home equity loan, a cash-out refinance or a home equity line of credit (HELOC), you can make “big ticket” improvements such as kitchen or bathroom renovations.
But you don’t have to sit idly while waiting for your equity to grow. It’s possible to hire contractors to complete short and affordable jobs as your budget allows. Then, when your equity becomes significant, you can dream big and plan an outdoor kitchen, additional bathroom, revamped kitchen, new flooring, and other awesome designs with our experienced interior designers.
3. Set Aside Money Every Month
If you haven’t bought a new home yet, another great plan is to start setting aside money monthly for your new home’s future renovations. Along with the costs for a down payment, home inspection, and closing fees, it may be difficult to know how to budget for a remodel. However, getting quotes from contractors or drawing information about national averages for improvements can give you some idea of your savings goal.
The national average for a typical renovation will cost between $100 to $200 per square foot, but these costs vary depending on the quality of materials you use, the complexity of the work, and if any structural reworking is in order.
It’s possible to have a significant amount set aside if you plan, which will give you more margin in your budget and financial freedom after you close on your new home.
If you already have a new home and need some hard numbers, move on to the next tip.
4. Make a remodeling plan with professional designers and get a real quote.
After you buy your home, it can be difficult to create an exact budget and vision on your own. Various contractors can quote you and not be honest about their price or timeline. But when you work with Republic West Remodeling and Habitat Renovations, we give you a detailed list of materials, prices, and a timeline that we promise to stick to as closely as possible through our Dream Assurance Plan.
Getting a consultation with professional designers like us is free and can give you a clear picture of what to expect, and it will cost. When you know exactly what you will spend, it’s easier to make a plan– whether you want to take out a personal loan, borrow from your home, or take a year or two to save some money.
Home Remodeling in the Phoenix Metro Area
If you currently own a home or plan to purchase a new one that needs improvements, Republic West Remodeling can help you create a definitive, well-thought-out plan with a solid timeline, honest price, and guaranteed quality. This will help solidify your budget for home remodeling.
Contact us today for a free consultation with one of our talented interior designers.