As the U.S. economy continues to grow and homeowners find themselves with more disposable income, many are looking to put that cash toward a big renovation project. According to a report from the Joint Center for Housing Studies of Harvard University, spending on home improvement projects by U.S. homeowners is expected to reach $340 billion in 2018. That would be 7.5 percent more than what was spent last year.
More home renovation projects, though, invite more competition for contractors and therefore mean higher costs on average. That’s why it’s important as ever for homeowners to be conscious of how to prepare and budget for a big project. With the right work put in ahead of time, it’s possible to save money and enjoy a better end result once the dust has settled.
No one should move forward with any significant renovation job until they’ve run the numbers, estimated total costs and decided how to pay for it all. HouseLogic broke this complicated process down into four concrete steps that should make things easier:
- Get a ballpark estimate of the cost of the project. This information can be found in many places, even before reaching out to contractors for a quote. For example, Remodeling Magazine tracks national and regional cost averages for the most common home renovation projects each year. These can be narrowed down to the state or even city level and should give homeowners a workable idea of cost.
- Estimate how much you can spend: If you plan to pay for your remodel with cash, then this won’t take long to figure out. But if you want to take out a home equity line of credit or refinance your mortgage to pay for renovations, make sure you know all the details of applying for and using these financing programs.
- Next, start getting quotes from contractors. HouseLogic recommended having at least three quotes from different contractors for comparison. It’s best to find these services by asking friends and family for recommendations, if you don’t know a few trustworthy tradespeople already.
- Finally, take the winning bid and add 15 to 20 percent of the total cost on top, then reassess your ability to pay. Most big home remodels end up going over-budget for one reason or another, but if the initial contract is already stretching your finances thin, it might be time to scale back the project.
Golden rules of affordable remodels
If you’ve gone through this process before, you should be well aware by now that the cost of a home renovation project often exceeds expectation. As you plan or reconsider your home remodeling project, a few general rules tend to apply, as noted by Zillow:
- Keep sinks, bathtubs and toilets where they are. A revamped floor plan is often the most expensive and time-consuming part of a remodel, so it’s best to avoid these jobs if possible.
- Look to save on materials. The cost of high-end countertops, tiles and more add up quickly. Try to use the most expensive materials sparingly in a remodel, and focus on those that add functionality rather than simply looking better.
- When planning an addition or new floorplan, don’t forget the sun. You might not realize how bright and hot one side of your home can get until you add new windows or tear down walls. At the same time, the sun’s heat and light can be used to your advantage in a smart design.