Home renovations and remodels come in all shapes and sizes. Blowout kitchens, bonus rooms, adding a home office, or giving your bathroom a facelift. Thousands of homeowners across the country are refinancing their mortgages to take advantage of low mortgage rates. So if you’re thinking about refinancing to start a home remodel, you’re in good company.
Mortgage rates are still low and refinancing is a competitive path to borrow against the home equity you’ve built. What’s more, home renovations and home remodels are one of the top ways to improve your living space and improve the value of your home at the same time.
Top Hidden Costs Behind Every Home Remodel Project
If you’re ready to renovate and build your dream, watch out for these top 5 hidden costs. Planning ahead can help you save thousands and keep your project on track.
1. Keep the scope of the project in check.
The number one reason most remodels run over budget might be surprising. It happens when homeowners change their minds. That’s right. Changing the scope of the project is the number one reason most renovations jump beyond the budget.
The scope of the project is typically defined at the onset. Once a contractor starts the project, the wheels are in motion: labor costs, materials, supplies and delivery. For example, changing your mind on flooring or kitchen cabinets often increases the cost dramatically. Usually, supplies have already been ordered and early work has begun. The changes might seem minimal, but the hidden costs can escalate quickly.
Take your time and picture your home renovation from start to finish. Ask your builders and designers as many questions as you can before the work begins. If you’d like to discuss your refinancing options, feel free to schedule a call or reach me directly at (408) 610-8011.
2. Expect fees for building permits and current building codes.
Most modern home renovations can appear straightforward. However, once the work starts, it’s very common that new obstacles come up. Specifically, work may be required to bring a home up to code.
Building codes often change, and new permits are almost always needed once new work begins–especially for older homes. Each state has its own rules to follow, but most states and counties require contractors to meet current building codes if they discover a conflict.
Any and all costs associated with bringing the house up to code will be passed along to the homeowner. Make room for these unexpected changes, especially if you have an older home or are doing major renovations.
3. Plan for structural repairs or hidden damage.
Floorboards, roofing, foundations and framing are all home to pests and critters. Often the damage is hidden until construction begins. Many homes have structural damage caused by termites, wood rot, mold, or water damage. Once construction begins, the damage is exposed.
It might seem impossible to prepare for unexpected costs like replacing the subfloor or foundation. However, it’s worth taking the extra step to have a professional home inspection done before you begin the work. Talk with your contractor about the age of your home. Also, find out if they’ve done work on other homes in your neighborhood.
Preparing for the possibility can keep the home renovation project moving and reduce stress along the way.
4. Increase your budget for eating out and weekend getaways.
Kitchen remodels often run much longer than expected, and homeowners often find themselves eating out more than they first planned. Camping in the backyard or eating on hotplates can sound novel, but the reality wears off quickly.
Many home renovations require contractors to shut off gas or water temporarily. Living without water, gas, or common appliances takes its toll on most families. In addition, people often get frustrated by the constant noise, construction, and dust that accompanies most home renovations.
Plan ahead and reduce your stress by setting a budget for a few weekend getaways. Enjoy eating out or taking a short vacation, knowing that you’ve planned for it.
5. Set aside funds for Homeowner’s Insurance
Home renovations and remodels often increase a home’s value. As a result, updating your homeowner’s insurance is a smart move. Set aside extra funds so that you can reevaluate your homeowner’s insurance policy. Make sure to include updates and renovations, especially if you’ve added extra square footage or a high-end kitchen remodel.
Typically, a short call to your service provider can help set the new coverage for your home.
If you’re considering a home renovation or remodel, I’d love to help answer your questions. You can reach me directly at (408) 610-8011. Most homeowners have a lot of options when it comes to refinancing a mortgage, accessing home equity, and home renovation loans.
We work with families, entrepreneurs and business professionals throughout California, Oregon, Washington and Colorado. Our goal is to save you money on your mortgage and help you reach financial freedom. Give us a call or schedule an appointment to get an early start on your next home renovation.