4 Steps to Budgeting your Remodel
By Scott Murfey
If you’ve ever embarked on a project as big as building your dream home from the ground up or as small as repainting a couple of rooms, you certainly know how fast the cost of a home project can spiral out of control. And while remodels are a great way to improve your quality of life and up your property value, it’s vital to create and keep a budget so you don’t end up with a half-tiled bathroom or a mountain of debt too tall to climb. There are some basic steps, however, that homeowners can take to keep on budget.
Ballpark the costs
- It’s easy (and fun!) to flip through home design magazines or watch HGTV for hours and dream big, but before you even get started, you need to have a rough estimate of what your dreams are going to cost you. Talking to friends who have done similar projects, or spending a few minutes researching online can help you get a handle on specific prices. But in general, a major upgrade such as a full bathroom remodel or family room addition will run you $100-200 per square foot.
Once you’ve focused your project ideas and done some cost estimation, you need to take an honest appraisal of how much you can reasonably afford. If you’re paying cash, the answer is more simple. If you are borrowing, however, you need to figure out how much a bank will lend you, at what interest rate, and how that monthly bill fits into your expenses.
There are a couple different types of loans you can get, but the best option for a home improvement is a home equity line of credit (HELOC). This loan is secured by your home equity and therefore qualifies you for a lower rate, and you’re also able to deduct the interest on your taxes. Just be careful – a HELOC is a line of credit rather than a lump sum loan. You will only be required to pay back the interest each month. And as anyone who had a credit card in college can tell you, this can be a slippery slope into a debt nightmare. It’s important to be conscious of this in budgeting your monthly installments.
Get quotes from contractors
- Get recommendations from friends, neighbors, and others you trust for at least
threedifferent contractors. Be sure to then ask to see some of their work, and check their references and online reviews. One of the keys to getting more accurate quotes is to be as specific as you can with your project details. If you know exactly what type of material, appliances, etc. that you want, then you can be certain that you and the contractor are on the same page.
Just as our eyes can often be bigger than our stomachs, our eyes can also be bigger than our checkbooks. Be sure to prioritize what’s most important to you, and talk to your contractor about places to trim and save – it’s important that you work together with him or her in order to stay on budget. Here are a couple way in which you might be able to lower your costs: a)
low-cost alternatives– for example, vinyl flooring in the bathroom instead of ceramic tile, b)
keep working appliances– you can always replace that refrigerator later, c)
scale down– maybe the new bathroom could work at 80 sq. ft. instead of 100. d)
buy it yourself– you can save up to 20% if you buy materials yourself. Just be sure to coordinate with your contractor.
At Murfey Construction, we pride ourselves in working closely with each client. This ensures that you are not only satisfied with your upgrade, but that together, we can make sure you stay on budget. If you are considering a home improvement project of any size, please visit us at