Remodeling on a Budget

by Amelia Gray
Guide to Home Improvement Columnist

The two most important tools for any major remodeling project--creating a reasonable budget and sticking to it--can't be found at the hardware store.

In 2004, the U.S. Census found that homeowners spent $198.6 billion dollars on their homes. Nearly 75 percent of that money went towards improving their homes’ market value with home improvement projects. It's a smart idea: using money from a home equity loan for a major remodeling project can exponentially increase the market value of your home. Creating a reasonable budget gives you a roadmap for any major remodeling project.

Make a Smart Budget
Spending too much money on a major remodeling project could make it harder to enjoy. To avoid going into debt, consider taking on a smaller project with a lower market value benefit: instead of upgrading kitchen cabinetry and appliances, spring for a smaller cost item like updated lighting or low flow fixtures.

If you do decide to work with loans, be smart about your money. Taking out a home equity loan allows you use your home's equity to improve its market value. Private lenders also offer home improvement loans that you can use in addition to the funds you have.

Typical Budget Expenses
Typical expenses that you should include on your remodeling budget are:

• Outside labor
• Building materials
• Appliances
• Equipment rental
• Accessories

If you're using a home equity loan, make sure you have enough savings or income to make increased payments. Selling the home can take care of a home equity loan balance, but if you're not planning on moving, be sure you're prepared to repay the loan.

Stick With Your Budget
It can be difficult to stick with the budget for your major remodeling project. Extra materials, underestimating labor or equipment costs, or simply over-reaching a project can mean going way over the budget mark. It's important to try and not overextend the money you’ve allotted for your major remodeling project, especially if you've taken out a home equity loan.

You may be improving your home's market value, but be aware of staying within your remodeling budget. Don't be tempted to go into debt over new appliances or accessories. Working within your budget allows you to act comfortably and makes it easier to enjoy the home you're improving.

About the Author
Amelia Gray is a teacher and freelance writer in San Marcos, TX. Amelia earned a Bachelor's Degree in English Literature from Arizona State University.

Source
U.S. Census