The first time is mostly the hardest one. Therefore, planning for the budget before you start spending money on renovations is essential. The following is a list of financial hacks new homeowners can take before making their new purchase.
The latest in home construction, building, and remodeling trends, as well as getting the most for your money when you’re contemplating renovations to a house, is what we’ll have you covered in today’s blog post! Here are some tips and tricks to help lower your budget.
As exciting as renovating your home for that fresh start can be, it can get pretty stressful, especially when the monies are tight. Thankfully, there are many practical hacks and tricks that you can use to create a stunning environment without exactly breaking the bank when renovating your home for the first time. Here is a couple.
1. Draw and Commit to a Budget
Before going out to purchase everything you need, it is imperative that you identify just how much money you have at your disposal. Creating a budget will help you stick to the money you set aside, meaning that you will not need to spend significantly more than you intended.
Before drawing the budget, start by identifying what parts of your home need renovation, the materials you will need, the tools needed, and the time and labor costs involved. With everything written down, you will have a clear picture of where you are headed and a rough estimate of how much money you need. When you have drawn the budget, add a 10% reserve for adjustability.
Once you begin renovations, try as best as you can to stick to items for which you budget. Be warned; you will see more beautiful and exciting items, but they will most likely be expensive. Stick to the budget.
- No 1. Start your list with the basics to lower the risk of spending your valuable budget on unnecessary items. You must prioritize your needs and determine what you will use the most. Let’s say, for example, that you have a kitchen renovation planned. Start with the fridge and stove. Once these are decided on, it will be easier to narrow down other items needed.
- No 2. Peruse at home improvement stores before purchasing so that you have an idea of the prices of various materials before their purchase and so that you can decide on the best option available.
- No 3. You need to ensure that you have a detailed budget for each part of the house.
- No 4. Buy everything only when you are almost done with all the work required to complete it (so no going off to buy things that you haven’t planned yet).
- No 5. Estimate costs at least three months before you begin the work (so it is not too late if things go wrong).
- No 6. Don’t forget to set aside a bit of money in reserve as extra spending money after all the renovation is complete.
2. Pay using cash
When using credit for major projects, you might get carried away because the money is available to you, but it is important to remember that you will be required to pay it back with interest. While using your credit card or taking out a loan may seem viable, it will cost you much more in the long run.
Other alternative ideas you can consider to finance your house renovations:
- No 1. Save up for the project before starting out
Suppose the renovation is planned for a long time. In that case, money set aside in a savings account can prove useful during bottleneck situations since cash is readily available, unlike having to pay back loans when things are tight.
- No 2. Refinance Your Mortgage.
In detail, you can refinance your mortgage if the rate is lower than what you currently pay. This idea will help you borrow less money to pay your balance faster. However, you will still have to repay the interest you paid on loan before refinancing.
- No 3. Use a Construction Loan instead of a bank loan
A construction loan is a special type typically used by people building their own homes or by homeowners who want to renovate their homes. Such loans are very flexible in how they are repaid and are understood by all banks, whereas certain banks only issue mortgages due to different requirements set out by each institution.
- No 4. Search and get a Home Equity Line of Credit (HELOC)
What is a Home Equity Line of Credit? A Home Equity Line of Credit is a revolving credit line available against the equity in your home. There are usually several Home Equity Lines of Credit types, including HELOCs and home improvement loans, where you can pay off your loan with a HELOC. The most common way to get a HELOC is to get pre-approved for an auto loan, then apply for a home equity line of credit on top of it. The money you borrow from the loan is then added to the auto and used as collateral when you make regular monthly payments.
The interest rate on a line of credit is usually fixed at prime plus 1%. In 2014, prime plus 1% was 6.95%, and it has since reached 8%.
- No 5. Crowdsource
To get a new fund for your project, you can also turn to crowdsource funding.
Crowdsourcing is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations. You can use crowdfunding for all kinds of creative projects: Product development, ventures, research, travel, and cause-related campaigns. This idea is one of the easiest ways to get funding for renovations. Aside from getting a loan with no credit check involved, crowdfunding takes less time to raise funds than other financing options. In fact, many start-ups have been able to launch their projects with little or no capital through crowdfunding.
- No 7. Take Out a Home Equity Loan.
You can take a home equity loan by applying to your bank or shopping at other banks. The interest rates on home equity loans are lower than those on balance transfer credit cards. You can also use the loan to renovate a room or purchase a new car, which is flexible.
In closing, many people have tested these hacks and financial tricks and found them proven effective through renovation. They are tried and tested methods that can help you save money and time.
Unfortunately, property owners cannot get away without paying for their renovations at some point. However, making better choices when spending a little money here and there will cut down on the overall expenses involved with renovations, big or small.
3. Give DIY a try
One of the biggest cost implications when renovating your home is labor. In some states in the US, a plumber can charge as much as $40 per hour. If there are certain parts of the house you can work on by yourself, it will serve you well.
If you are afraid that DIY is not your kind, you can try using online sources such as YouTube and Pinterest for ideas and step-by-step guidelines on going about different tasks. However, remember that not all tasks are meant to be done this way. Things such as installing drywall, electric wiring, laying tiles, moving utility lines, and even plumbing are best left to professionals. Some of these are illegal to do without licensing.
If you want to go the DIY route, you can try taking down wallpapers, skim-coat off walls, clearing surfaces, and other similar activities. If you want to go farther, try and identify what you are comfortable trying, and get the right tools for it. This way, you do not have to pay for 100% of the labor, which may save you significant cash.
4. Repurpose some items
When renovating your home, you do not have to buy everything anew. If, for instance, you are renovating your bathroom and kitchen, you can repurpose some of the cabinetry, especially if it is still in good condition. Slap on a fresh coat of paint and fix them back. You can also reuse faucets and sinks if they are still in great condition and if you are not looking to change the style entirely.
Apart from items you already have, you can purchase second-hand fixtures from auctions, yard sales, and other similar places. Items may sell for significantly less, allowing you to save a good amount of cash, especially if you are looking to make major changes involving large and expensive appliances.
5. Sell what you can
If you have no intention of repurposing what you already have, try and sell it to recover some of its value. In a home renovation where you want to replace all kitchen appliances, living room, library, and dining room furniture and other similar items, you can organize a yard sale to help you add to the money you already have.
6. Try to maintain your house’s footprint
Sometimes, it is normal to want an entirely new feel when renovating. That is alright, and it is possible to achieve without exactly changing the floorplan of your house. The cost implications can be huge. For instance, if you are looking to shift the location of a bathroom or two, or even the kitchen, you are looking at redirecting the entire plumbing, gas, and electric system.
If you want to create more space or lessen it for better privacy, you can knock down a wall or put one up, but try as best as you can to maintain the house’s initial plan.
7. Know where to channel your money
When making purchases for your home, it is important to identify where most of the money should go. Try as best as you can to spend more money on items you intend to use more and for longer. Such items as kitchen countertops, wash basins, kitchen sinks, and large appliances are not items we regularly replace, so you ought not to skimp on these. Others, such as doors, blinds, and bulbs, do not have to be overly expensive, but this does not mean you ought to buy poor quality. Find the right kind of balance that will work within your budget.
8. Look out for sales
This requires a good deal of patience, and it is always worth it. The best thing about waiting for sales is that there is almost always one somewhere. With sales, you can get your dream items for significantly less, which may reduce your entire renovation budget by a large margin.
Take advantage of holiday sales, Black Fridays in November, end-of-summer sales for outdoor furniture, and others. If you are not in a big hurry to conduct a renovation, be a little patient, especially when you know that a holiday is around the corner.
9. Ask for help
Everyone has some kind of community around them. You could have a sibling, a parent, a workmate, a son or daughter, a spouse, or a friend willing to help you with your renovation. While you may not exactly require them to take on major tasks (unless they are professionals), you can ask them to help you with the DIY tasks.
Depending on your occupation, you can even trade crafts with some of them in need of services. If you are a plumber, you can ask your electrician friend for help and help them with plumbing work when needed. It is a win-win situation that helps everyone save money.
10. Conduct thorough research before hiring labor
As mentioned earlier, labor can be very expensive. For this reason, it is imperative that you conduct extensive research before settling for a particular contractor, plumber, electrician, and so on.
One thing that works best for me is finding an affordable contractor with different professionals for different tasks. Before settling on one, ask to see a portfolio and ask for quotes. Make sure you have three or four to compare to make an informed decision.
Remember that the most expensive may not be the best and that cheap labor does not translate to savings. Cheap is, after all, often expensive. Find the right balance between good quality work and cost.
11. Stay away from trendy styles
Trends are exactly that – trends. If you base your renovations on styles, appliances, and fixtures that are current and trendy, you are setting yourself up for a renovation in less than a decade’s time.
If you can, stick to timeless pieces and styles mostly unaffected by trends. For instance, you can do a hardwood floor, Saltillo tiles, or terrazzo instead of shiny 3D epoxy floors, which may be faced at some point. You can also do a classic brick accent wall as opposed to wallpaper.
Going for timeless styles may not save you money in the here and now, but it will save you another major renovation too soon.
12. Take your time
If you recognize that you do not have all the money at once, you can take your renovation slow. You can split your project into rooms and work around the whole house. Start with the most pressing places, especially those directly affecting your home’s functions. You can start with bathrooms and the kitchen, then move to less pressing areas such as TV rooms, libraries, and garages.
Another place to start is the largest renovation project. It could be the roof or flooring, or any other place. Starting with the most intense project means you will make a marked improvement to your home as you wait to do the rest.