Creating A Remodeling Budget

You have done all of your homework and have adjusted the proposed products features of your project to get the most out of each item. It is a juggling act and you will find yourself wanting to spend more on items or materials that are important to you and less on others or areas that can be less obvious. Gather all of your estimates for the project (that you will be purchasing), design fees, contracts, and loan paperwork together. Adding up their costs will give you the projected cost for your new home improvement. You should then include an additional 15-20% of that total figure to cover cost overruns or changes–just in case. This should give you a final budget figure to take to your loan officer.

No matter what your budget is, you want to keep it under control. It is very easy for that money to burn a hole in your pocket before it is time to make the last contracted payment–which may be several months down the road. Resist the temptation and keep this money earmarked for this project as contracted. Your contract will state when and how much is due at different construction intervals–the best contractor is a paid contractor!

Just when you think you have everything covered in your budget, think again. You believe that your home has proper electrical and plumbing systems, but until demolition begins you can’t be sure (unless you put them in). When finalizing your budget, you should have planned for cost overruns (unexpected conditions while the construction is being completed). Plan for it because it may happen and it is better to be prepared.

On average, allow at least 15-20% of your total budget for cost overruns. If you come in under budget then everyone will be happy!