Are you considering a home improvement project? If so, it's essential to plan out your budget and make sure that you can afford the renovations. This article will share some tips and strategies to use when figuring out how much home improvement you can afford. It's important to be realistic about what you can afford and not overextend yourself financially, too. By following these guidelines, you can ensure that your project stays within your budget!
First, you want to consider the following.
How are you planning to finance your project? Are you planning to save up and pay cash? Or are you planning to finance it either through an equity loan or a construction loan?
Always plan a 10%-15% buffer to cover you if an unexpected expense comes up.
Where you live can play a significant role in how much to expect to pay for a home improvement project.
According to HomeAdvisor, the average cost of renovating a home that is 1,000 square feet is $19,000. For homes in the 3,000 to 4,000 square foot range, the average cost climbs to $87,500.
If your project is significant, you may need to budget for accommodations if you need to move out of the house for a bit.
It is not a bad idea to give your home insurance company a call in the planning stages to find out if your renovation will affect your policy price.
The best way to plan out your budget is to consider your home's value. As a general rule, you do not want to spend more than 10-15% of your home's total value on a single room. This is an essential consideration if you do not plan on staying in your home long-term. You don't want to spend more and then not be able to recoup that value when you sell the house.
For example, if your home is worth $300,000, the maximum you should spend on a kitchen or bathroom renovation is $45,000. If your house is worth more, the spend on a renovation could be higher.
If you’re not sure what your home is worth, we can help! As REALTORS®, we can help you determine its approximate market value.
Now, there are a couple of different ways to figure out how much home improvement you can afford.
One way is to use an online calculator, like this one here, Remodel Calculator | Estimate Your House Remodeling Costs (remodelingcalculator.org), to find an estimated cost of the project and divide it by the number of months you expect it will take to complete. This will give you an idea of how much you need to budget each month.
If you are planning a bit further out and planning to pay cash, another way you could figure out your budget is to estimate how much money you can save in the months leading up to when you would like to start the project. Can you put aside $500 per month for twelve months? This would give you $6000 to spend on home improvements in a year’s time.
Whatever method you use, be sure to include all of the costs associated with the project. This includes materials, labor, permits, and any other necessary expenses, like relocation costs while the project is completed.
By planning ahead and doing your research, you can make sure your home improvement project goes smoothly—and doesn’t break the bank.
Now that you know how much home improvement you can afford, it's time to start planning! Be sure to check out our other articles for more tips and advice.
If you have any questions about home improvement or budgeting for home improvement, feel free to contact us at 781-875-1199. We’d be happy to help!