Keep the cost of your remodeling project in perspective. According to the American Homeowners Foundation, moving to a new home typically costs 8-10 percent of the current value of your home. On a $150,000 home, this cost is $12,000-$15,000; this is simply what it will cost to move. This is a good base figure for beginning to establish your remodeling budget. A good number of remodeling projects can be done for the money spent in relocation, and remodeling will add value to your current home as well.
How much remodeling could you do for 8-10 percent of the current value of your home? How much work would you have to do in a new home should you decide to move? If you completed the finance worksheet, you know how much you can spend-but how much should you spend? The answer varies by circumstance. You should spend as much as is necessary to create your dream home if you are staying in the home for a long time and can afford to do so. However, if you are planning on moving in the near future (within 3 years), be sure to remodel within the standards for the homes in your particular neighborhood.
Once you determine how much you can afford to spend on a remodeling project, decrease that amount by 10-20 percent. This money should be put in a reserve account to cover any change orders or incidental charges accrued along the way, which will prevent a frantic scramble for additional funds at the end of a project. You also might want new furniture, new curtains, etc., when the project is complete.
Remember that your choice in products will determine the cost of the project. There are many different levels of product quality as well as price ranges. Talk to your contractor about various options to meet your overall goal.
Project cost will vary depending on your location, the size of the room, and what features or options you choose. Your best bet for establishing and meeting a realistic budget is to hire a professional remodeling contractor. Your contractor should be familiar with many of the financing options available and be able to help you arrange the financing you need. Many are often linked with a lending institution and can act as an intermediary to obtain financing for you. This offers you convenience and a third party interest in the project’s success.