Remodeling your home is an opportunity to make it more functional for you and your family and to increase its property value significantly. Entering renovations thoughtfully and aware of the cost is important, even if financing isn’t a concern. No one wants project overruns, even if they have plenty saved in the bank to finance the renovation themselves.
Responsibly financing a home renovation or remodel begins by setting a budget, defining the project’s goals, and comparing available financing options, such as using your personal savings or obtaining a low-interest loan. Intentionally planning each aspect of the remodel, factoring in structural issues or other challenges, and being realistic about what’s possible considering the original structure can help you responsibly manage the renovation.
You can call Phase One at 803-404-7168 to start planning and designing your full home renovation today.
How Can You Finance Your Home Renovation or Remodel?
Even if their savings put them in a favorable position to afford a complete home renovation or remodel out of pocket, homeowners may still choose among different financing methods.
Equity-based loans for renovations and remodels generally offer a fixed, relatively low interest rate. If you don’t have significant equity in your home, an unsecured personal loan can help finance, but it may come with risks, high interest rates, and short loan terms. Using credit cards to finance a home renovation is also risky because of the interest rates on late payments.
Financing the renovation project using your own savings eliminates the need to wait for lender disbursements during construction.
Tips for Responsibly Financing a Home Renovation or Remodel
For homeowners about to embark on a full home renovation, responsibly managing spending and financing is of the utmost importance, and we can set you off on the right foot by establishing a good budget.
Set a Budget
The first step in responsibly financing a home renovation or remodel is setting a budget. Although the total cost of the project may not necessarily be a concern to some homeowners, setting and sticking to a budget helps keep residential construction projects on track. Homeowners looking to get loans to finance renovations must know their projected spending in advance, too.
Setting a budget involves including all renovation costs, from materials to labor.
Prioritize Must-Have Items
Next, we can spend time with you reviewing and prioritizing your must-have items. Tell us if your family requires a laundry room, a butler’s pantry, or an additional en-suite bathroom. Focus your spending on what you need most from a functional standpoint. Once we have worked those elements into the design and estimated their cost, we can turn to other features you may want but don’t necessarily need.
Consider ROI
It’s also good to consider ROI when financing a renovation and planning your remodel. We can help you maximize the return on investment of adding high-end features, finishes, and appliances, updating plumbing and electrical systems, or even adding outdoor amenities that boost property value. Even though you are planning to live in the remodeled home for years, it’s smart to think about the future when you might sell the house.
Be Realistic
Being unrealistic about what your budget can achieve may lead to future financing issues with your residential construction renovation project. We will be upfront about how feasible all your design and structural requests are, and how much they will most likely cost.
FAQs About Responsibly Financing a Home Renovation or Remodel
When Should I Start Thinking About Financing My Home Renovation or Remodel?
It’s ideal to secure financing or identify how much of your personal savings you want to put towards a renovation before planning the remodel with Phase One, as this will guide the design decisions we help you make. That said, you can’t get a loan to renovate your home without detailed construction plans.
How Can I Keep Spending on Track During a Renovation or Remodel?
Keeping spending on track during home remodeling begins with careful planning. We can provide detailed renovation plans for your contractor to follow. You can create a contingency fund with our help and set aside some money for future decisions during the renovations, such as appliances and finishes.
How Can I Finance My Home Renovation or Remodel?
You can finance your home renovation entirely on your own using your personal savings. You may also get a loan from a bank based on your home’s equity, personal credit score, and debt-to-income ratio, among other factors.
How Do Homeowners Irresponsibly Finance Renovations or Remodels?
Homeowners who purchase materials before securing financing, fail to plan for hidden costs and expenses often associated with renovations, or seriously misunderstand how far their budget will go, might end up spending far more than they anticipated, which we can help avoid through intentional, focused planning.
Should I Use My Savings to Finance My Remodel or Renovation?
Whether you use your personal savings to finance a remodel depends on your financial situation and comfort level. Take an honest look at your financial health and do what’s best for you and your family.
Is it Better to Get a Loan to Finance My Remodel or Renovation?
Even if you have enough saved up to do a full home renovation without getting a loan, a fixed-rate loan, like an equity-based one, might enable you to do even more and alleviate any financial stress, no matter how minuscule.
How Can I Manage Financing Throughout a Home Renovation or Remodel?
Managing financing throughout a home renovation or remodel requires staying up to date on construction progress and spending. We set our clients up for success when entering construction by providing detailed instructions on how to use their funds most effectively.
Call Phase One About Planning a Home Renovation or Remodel
You can call Phase One at 803-404-7168 for help planning a home renovation or remodel today.
