With so many families spending more time at home because of the ongoing COVID-19 pandemic, it is no surprise to learn that home improvement projects are booming. However, with a struggling economy and high unemployment rates, it is also important that you make smart choices with your money. Here are four things to keep in mind when budgeting for home improvement upgrades.
Before you commit to any type of home improvement project, you are going to want to do your due diligence and shop around. Just like with any type of service, there are varying degrees of price breakdowns and services offered. For example, when looking for the best HVAC company Salt Lake county, or whatever area you live in, you will need to consider price combined with the level of service.
For the most complete picture of approximate costs, you should get bids from at least three different contractors. Start your search with local companies. Online reviews can be helpful, but you will have the most confidence if you hear positive reviews from friends who have used the vendor before. After you have selected the contractor for the job, it is prudent to ask them to look over your budget and plans to make sure that you have not neglected anything important.
Nobody looks forward to dealing with the financing involved in a home improvement project. However, this necessary evil must be dealt with in careful detail if you want the project to be a success.
Clearly, how you finance this project largely depends on your personal budget and financial situation. If you are planning to tap into your home equity, it is important to not overextend yourself by taking too much out. Doing so could put you in a perilous financial position if the housing market does not perform as well as you anticipate.
You may also look into taking out a more conventional loan to help finance these projects. Not tying the loan to the value of your home is a good way to protect yourself from decreasing home values.
If you are looking to renovate a large part of your home, you should break it down by room while building the budget. This will help you to see more clearly where all of your money is going.
Focus on What Really Matters
There is no end to the list of possibilities when upgrading your home. This can make it challenging to decide where to start and how to best invest your home improvement dollar.
Before you dive into the upgrades, it is vital that you determine your overall goals.
If your goal is to boost the value of your home for resale purposes, you will want to focus on general upgrades such as a new roof or backyard deck. If you plan on staying in your home for the foreseeable future, you can put your money toward improvements that appeal to you personally. This is when you want to think about projects such as a new interior paint job or upgrading your master bathroom to suit your own tastes.
Build a Cushion
Anyone who has ever undergone a major home renovation will tell you that it is rare that the project comes in under budget. For this reason, it is important to build a comfortable cushion into your budget and to scrutinize all steps of the renovation to uncover hidden costs. For example, if replacing your kitchen appliances, you are going to need to account for the cost of the disposal of the existing appliances.
Keep in mind that labor will account for approximately 20% to 35% of the total renovation budget. You also need to factor in the costs for little items such as paintbrushes, tools, and other elements that may jack up the total cost of the project.
There is no doubt that there is a lot of work that goes into undergoing a home improvement project. However, the reward will be worth all of the time and effort if you make smart decisions with your money. Having a solid budget plan in place prior to the first demolition will give you peace of mind that you are making the wisest decisions.