Creating a budget can be rather difficult, especially when it comes to new projects. Knowing what you want is the easy part, but figuring out how to manage the cost is usually another story.
What is the secret to a proper renovation budget? Details. From including shipping costs in the calculations to knowing exactly how many parts to buy, sticking to the plan often comes down to the details. Check out our process for creating a detailed renovation budget and preventing overspending.
Step 1: Create a Detailed List of Goals
Start by making a comprehensive list of all that you wish to accomplish in the renovation process. This step will help establish an order of priorities and ensure you meet deadlines.
As you make your list, ask yourself questions such as the following:
• What do I want to accomplish overall?
• Which renovations are a must?
• Where can I compromise?
• Which aspects am I willing to splurge on?
Carefully consider the implications of your priorities and their order. It may not always be best to complete the most important project first. For example, say your number one goal is to have a new front door. If that is the most convenient entryway into your home, you may consider waiting until you finish other indoor projects first.
Step 2: Get Multiple Contractors to Bid
Before you can establish a budget, you have to have a sense of the potential renovation costs. Online research will help you understand the average rates in your area and ensure you receive a fair bid. However, you will need to get contractors to bid on your project as costs will vary depending on your needs.
We recommend having at least three contractors bid on your projects. Having multiple contractors bid will give you plenty of options without being overwhelmed. It is important to understand each aspect of the bid and the details for each one, as they may differ slightly. While the cheapest bid may reduce renovation costs, it is not necessarily the best option. For instance, one contractor may be more expensive but offers cleanup services that another company does not.
Step 3: Look Into Financing Options
There are tons of financing options out there, but some are definitely better than others, depending on your circumstances. That being said, this is definitely a step you should put a lot of effort into, as it can significantly impact overall renovation costs.
Credit is a huge part of qualifying for financing options. If you know your credit score is less than optimal, consider ways to boost your credit score fast. However, do not forget that there are also some private home loans for bad credit. Some contractors even offer special financing.
Additionally, a home equity line of credit loan is a popular option for renovations. Simply put, it acts as a second mortgage. It works by allowing the homeowner to borrow money against the equity of their home. Instead of receiving a lump sum of cash, the homeowner borrows against a line of credit. The interest rate and payments for home equity line of credit loans are not fixed.
Home equity loans, on the other hand, provide the homeowner with a lump sum of cash with fixed repayments in return. Homeowners apply for a specific amount and receive the total amount upfront if approved by a lender. Home equity loans have a fixed interest rate and fixed payments for the term of the loan.
Step 4: Apply for Grants
Grants are an excellent way to cut down on renovation costs and stick to the budget, and they might even be more accessible than you may think. From large federal government agencies to small independent local businesses, home improvement grants are not very hard to find.
There are many ways to qualify for a home improvement renovation grant. Individuals can qualify based on characteristics such as ethnic background, income, credit, and age. Plus, there are grants based on the features of your home. For example, there are several options for historic homes and those in rural areas.
Once again, pay careful attention to the details. There may be deadlines for applications, long turnaround times, or rules on how to use the money. Some grants even require certain qualities in potential contractors.
Get Funding for Your Renovation Budget Today
This guide shows that keeping renovation costs affordable doesn’t have to be hard. As long as you plan your renovation budget accordingly, you’ll be able to create the home of your dreams.
Need help scoring money for your project? Contact Homeowner Funding today to explore your options!