The decision to remodel your home is not one that should be made lightly. It’s a big investment of time and money, and like any investment, should be made with full knowledge of the risks and rewards associated with it.
Set Your Goals
Before you can start thinking about how much to spend on a home renovation, you need to determine what you are hoping to achieve with the project. Are you preparing to put your home on the market? Create a more comfortable space for your family? Something else entirely?
The answers to those questions will help you determine how extensive the renovation will be and how much you want to spend. The answers will provide a baseline for you to measure success when the remodel is finished.
Armed with your goals, it’s time to set specifics and attach costs to them. This includes ballpark costs on materials and labor.
It’s important to go into this process with an open mind so you can be realistic about the numbers. For example, you might go into the project thinking that you want granite countertops, but end up considering other options after you do some homework on the costs.
No cost should be left uncovered in this part of the process. You need to know exactly what you are paying for now; otherwise, you will run into unexpected costs later in the project once the renovation is underway.
Consider Financing Options
Once you have your goals and costs, the last step in setting your home renovation budget is figuring out how to pay for the project.
If you do not have the funds on hand for the project, you’ll need to consider some type of loan. You can refinance your home, take a home equity line of credit, or opt for another borrowing solution in consultation with your bank.
The option you choose will depend on what your budget is and what the rest of your financial picture looks like. Your bank can also advise you on whether your home renovation budget is correct given your home’s value and the rest of your assets.