Home remodeling is economically draining. Hinging on the scope and size of your project, a home refurbishment project may cost you a small fortune. The majority of homeowners don’t have huge chunks of liquid cash at their disposal to finance renovations.
In fact, a Harvard University Joint Center for Housing Studies report revealed that Americans were expected to spend $316 billion in home refurbishment project a record at the time. About $19 and $24 million was expected to be invested in bathroom renovations and kitchen remodels respectively.
Below are five tips you can employ in your house remodeling project with the aim of making the undertaking make financial sense.
1. Mortgage refinancing
Supposing the prevailing mortgage rates are lower compared to the price you’re locked into, refinancing your mortgage may prove a brilliant idea as you stand to save from lower rates. Refinancing enables you to profit from reduced interest payments and to use the feed up cash to finance a renovation.
Refinancing requires that you pay off your first loan thus allowing you to take up a second loan albeit with a reduced rate. Refinancing allows you to cut down on monthly repayments and utilizing the freed up cash to finance your home improvement plan.
Alternatively, you may contemplate a cash-out refinancing option whereby you refinance your current mortgage and taking up a much larger home loan. Consequently, you get the cash differential. We must stress; however, the cash-out refinancing option must be considered only if you’re sure the improvements will boost your home’s value.
Check out Mortgage Brokers to understand how a mortgage refinancing can help you fund a home improvement plan.
2. Desist from making over the top upgrades
It’s tempting to want to add a host of upgrades during your home makeover. However, such a move might fail if you happen to reside in a humble neighborhood. A good number of homeowners apply the early real estate wisdom: ‘Acquire the least costly home in a good locality you can afford.’ Owning the poshest, biggest or coolest house in your neighborhood makes it even harder to unload in future at a price commensurate to your input – particularly in a buyer’s market.
As much as you want your residence to feel comfortable and attractive, going over the top in remodeling limits your re-selling efforts.
3. Start out with a budget
A ballpark figure may not suffice. It’s essential to determine from the start how much you wish to spend on a renovation project. Quite often we tend to add minor items to our budget, and before we know it, your allocation is blown.
Drawing up and sticking to a budget aids in determining from the onset, what you can comfortably afford to avert financial stress and disappointment down the road.
4. Focus on your needs
Remodeling ought to be realistic. Evaluate the things that bother you the most about your home and address them accordingly. Also, consider things that may minimize your overall costs such as green home renovations. Upgrading your furnace and windows and adding insulation may help in cutting monthly expenses and put you in good stead of getting a tax credit.
5. Tackle structural issues first
Start with fixing mechanical or structural problems. Regardless of whether you wish to sell or stick around for a while, it’s imperative that you fix the earlier mentioned issues before they turn into hazard issues.
An electrical issue or leaky roof with solar PV may cause significant and costly problems in future if left unattended.