Remodeling projects are major investments for any homeowner. Budgeting for these big purchases is an important part of the process. Good planning and family communication will help ensure that the financial aspects of a project don’t overwhelm the excitement of your home’s new features.
Ballpark The Costs
Before going too far, it’s helpful to estimate the range of costs for your type of project. Remodeling Magazine publishes national averages for a wide range of project types. A per-square-foot estimate can also be useful. Major remodeling projects often range from $150-$250 per square foot. At this point, you’re trying to get a rough idea of the cost.
Determine Your Financing Needs
Once you have a ballpark cost range in mind, the next question is what you can afford. If you’re paying cash, that’s pretty easy to answer. But if you’re borrowing, it’s important to understand your financial situation and your ability to repay the loan.
Step One: Decide how long you plan on staying in your home. Homeowners planning to live in their homes for many years often feel more comfortable spending a little more, or getting a longer financing term, to create their dream homes. Homeowners planning to sell in the near future tend to make more budget-conscious choices.
Step Two: Consider your financial situation. Determine your monthly income and think about how much credit card, mortgage, student loan, etc. debt you have. When you go to a bank for financing – like a home equity line of credit, they will base any loan decisions on these pieces of information.
Step Three: Calculate your financing potential. The National Association of the Remodeling Industry (NARI) has a helpful set of calculations that can be used to estimate how much financing you could qualify for. Click here to learn more about NARI’s financing calculations.
Step Four: Identify your financing options. Visit with your banker. If you’d like, we can help you with the financing as well. We have financing partnerships that can be very affordable.
Prioritize and Phase
When we begin planning your project, we’ll give you a detailed estimate. You will have a clear understanding of the cost of each element. We may suggest phasing parts of the project to spread out the costs. We can also suggest options for different materials or have you do some of the work – like demolition or painting – to save some costs. We’ll do everything we can to build the best project for your budget.
Sometimes, we find things once the project starts that require additional work to solve. We’ll do our best to identify potential issues up front, like older foundations or outdated wiring, that can add to a project’s costs – and keep the cost of dealing with those issues as low as possible.
Remodeling projects are big investments. Good planning can help keep the financial details manageable. We have decades of experience helping our clients find and maintain an appropriate budget for their project. Ask us about our financing options and other suggestions for managing the financial aspects of the project.