You must be asking if the cost of home remodeling is too high compared to the amount you will gain if you sell after the renovation is complete. And how can you stay within your budget once you are pitched all the exciting options in kitchen countertops, cabinets and appliance?
What is proven to add value to your home? You might just end up determining that the potential cost of home remodeling could put you in a bad spot. You may need recourse to a construction loan during the process, so it’s best to plan before you sign any construction agreements.
First to ask is if you are in the first place qualified for a construction loan to lift some weights off of your cost of home remodeling. Construction mortgage companies require that you own your lot. This is to ensue that the bank has a way to get back their investment or collateral if you fail to accomplish the mortgage payment; if not then you might need to pay a premium. Then you can proceed to the 1-year loan plan to provide for your cost of home remodeling. The good thing now is that you are not obliged for the full construction loan amount. You only have to pay interest for the amount you actually borrow each draw (which have service charge for each) so you won’t really be carrying the full mortgage until the end of your construction. Still, you need some ready cash to pay your contractors to keep them working knowing full well they won’t get fully paid until the work is finished. Best of all, you need to learn how to budget. Be sure to account all expenses to be drawn, from the contractor, plumbers, electricians, masons, excavator, landscaper, designer, etc. to the material costs for the drainage, windows and rood, even paints. Put into order these quotes. Also notice that the mortgage company will not agree to your loan unless you have a cost overrun buffer. And then you need to supply permits, survey, and a copy of your floor plan so their appraiser could inspect your property and determine whether you project could appraise for the amount of your loan.
So far these will be the immediate cost of home remodeling via a construction loan. Remember that you also have the option of returning the money you didn’t get to use. Just make sure to follow the rule – ‘estimate high but spend less’. This will let you sleep at night and in the end, you might just be please to gain the extras.