It is easy to come up with areas of your home that you would like to change and remodel. We all dream! The hard part is determining what changes you can actually afford to make. Here are tips to set up a budget for a remodeling project.
- Have an idea of how much the project will cost. Prices vary drastically depending on the task. In San Diego, to add an attic bedroom, it costs an average of $58,550. A backup power generation is an additional $12,955. And a basement remodel costs approximately $75,507.
- Know how much you can spend. After determining the cost of the remodel, you have to figure out if you have the money to make that change. If you have the money in cash, then you are set to go for this step. But if you need a loan, you have to know the amount the bank will loan you. Paying off the loan will need to be added to your monthly fees to verify whether or not you can afford the remodeling project. Two common loans are the home-equity loans and the home-equity lines of credit. The benefit of the home-equity loans is that there is no closing cost, the interest is fixed (making it easier to budget), and they are tax deductible. The disadvantage is that the interest may be higher than most loans. A home-equity line of credit is similar to a credit card. There is a maximum of the amount you can spend, but you can spend the money at different times, depending on where you are at in the project. The interest rate will vary and potentially change over time.
- Find a contractor. Have your friends and families recommend contractors they have previously used for projects. You will want to research the contractors through looking at their work, checking out their references, and reading any reviews. Provide a couple of your favorite contractors with the project you want done, including any specific materials you want in the project, and ask them for a bid. Select your favorite, but include an estimated 20% to the cost for any unexpected problems.
- Cut the costs. If the expected costs and your budget are not in support of each other, work with your contractor to find areas to cut the cost. This may include: using different materials, purchasing the materials and products necessary by yourself, or downscaling the project.
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