Remodeling can be a stressful process for homeowners, and most of the tension usually stems from money issues—how much is available, how to spend it and so on. The best way to avoid money-related stress is to create a detailed remodeling budget and stick to it throughout the entire project. Consider the following tips to get started:
Decide how long you plan on staying in your home. The length of time you intend to stay in a home should affect how much money you invest in it. If you’re going to stay for more than 10 years, you should spend as much as you can to create your ideal home. However, if you’re planning on moving in the near future, you shouldn’t overbuild for your neighborhood. Look into your area’s real estate comparisons and keep your investment in line with the average home sales price. You don’t want to invest thousands of dollars that you won’t be able to recoup at closing.
Make a list of all your debts. Include any debts you pay on a monthly basis, such as mortgages, car loans, credit cards and other items with a fixed monthly payment. This list shouldn’t include payments for groceries, utilities, telephone services or other general expenses.
Determine your total gross monthly income. Include all sources of income that you would list on a loan application.
Make sure you’re comfortable with the exact layout of your project. Hire a design/build firm that uses a 3-D architectural package to help you understand your new space, including how your furniture will be arranged.
Make sure you fully understand the contract’s payment structure before signing it. California law limits upfront payments to 10 percent or $1,000, whichever is lower, with the remainder charged as the work progresses. “It’s especially important to understand when payments are due so you can plan for them,” says Terri Cannaday, co-owner of Cannaday Construction in Vallejo. “You don’t want to pay a hefty upfront fee only to have the contractor disappear.”
