Completely home Renovation is not an easy or inexpensive task. However, with a little planning and forethought, homeowners can ensure that this remodeling project remains as affordable as possible. With that in mind, here’s a look at the cost of a complete home renovation. Read it again to get a better idea of what to expect for your bottom line.
What is the average cost to gut and remodel a house?
According to Home Advisor (NASDAQ: ANGI), the average cost of a home renovation in 2021 is $ 46,755. However, this figure only takes into account owners who have completed one or two projects at a time.
HomeAdvisor data on remodeling costs to empty and home renovation shows that most homeowners can expect to spend between $ 100,000 and $ 200,000 on a complete home renovation.
What Factors Affect The Cost of Home Renovation and Remodeling ?
Many factors will affect the amount of your final home renovation bill, including
Typically, renovating older homes costs more than new ones. Older homes are more likely to have underlying issues that need to be addressed during construction. The renovations required to bring older homes into compliance with current building codes may also be more extensive.
Likewise, the larger the area of a house, the more expensive the renovation work will be. According to HomeAdvisor, the average cost of renovating multiple rooms in a 1,000 square foot home is $ 19,000. At the same time, the average cost of renovating a 4,000 square foot home is $ 100,000.
The cost of your renovation will also be influenced by the cost of living in your area. According to Home Advisor, a home renovation and refurbishment will likely cost between $ 21,000 and $ 90,000 in New York City. However, a similar project in Denver, Colorado would likely cost only between $ 13,000 and $ 56,000. Base costs for materials like appliances and countertops, as well as labor costs for a general contractor can also be higher depending on where you live.
The next piece of the puzzle is figuring out which rooms in the house need to be renovated: the kitchen and bathroom, for example, are two of the most expensive rooms to renovate. The average cost of a kitchen remodel in 2021 is $ 20,000, with the most expensive projects approaching $ 50,000. In contrast, renovating a bathroom costs between $ 6,000 and $ 35,000, depending on the equipment chosen and the removal of the plumbing.
At the other end of the spectrum, a living room or bedroom remodeling project is typically between $ 1,500 and $ 5,500. In particular, renovating a master bedroom is usually at the higher end of that range, especially if homeowners are keen on moving the walls to create a new walk-in closet.
Material and Labor Choices
The last factor that influences the price of a home improvement project is the choice of materials and labor. Remodeling magazine estimates that hiring labor, as opposed to DIY, can increase the cost of employment from 18.6% to 50.8%. Likewise, choosing more expensive materials, such as high-end appliances or semi-custom cabinetry, during a renovation will also increase the end cost.
How to Budget for a Home Renovation
Now that you know what factors can affect the cost of home renovation, let’s take a closer look at how to budget for the home improvement project realistic. When done right, a renovation can net you a lot of money. Follow the steps below to create a budget that’s right for you.
Consider Your Financing Options
Since most people cannot afford a full home renovation in cash, the first step in setting a renovation budget is to consider your financing options. Homeowners can choose from a number of ways to cover these costs.
We walk you through the different home improvement loan options in more detail below, but what’s important to note right now is that putting money first order in your funding will give you a clear idea of how much you need to spend.
Decide What You Want
Once your financing is in place, the next step is to clearly define the final aspect of the renovation. When you get quotes, each contractor will ask you for this information. The more details you give them, the more accurate your estimates will be.
With this in mind, take the time to be inspired by the design online or visit the showrooms of the various products of the house, such as kitchen cabinets or hardwood floors. Examining the different options available will not only help you get a clear idea of your personal style, but also give you a better idea of what you can expect to spend.
Get a Few Estimates for Your House Renovation
Once you’ve established a vision for your remodeling project, ask a general contractor to give you an estimate of the home renovation cost. When trying to stick to a renovation budget, you can ask for a “firm” estimate, which includes a detailed list of project costs, as well as the schedule. However, keep in mind that these estimates take a long time to make, and you may be charged for the service.
Plan for the unexpected
Renovation projects often end up costing more than initial estimates due to unexpected bumps in the roads that occur along the way. That is why, when setting your budget, you may want to supplement the estimates you receive to account for unforeseen expenses. It is generally a good idea to add 10-20% to the budget for these expenses.
Options for Financing a Complete Home Renovation
As mentioned above, there are many options for covering the cost of renovating a fully renovated home. We have listed the most common below for you to review:
FHA 203k Loan
If you have just moved into the home you plan to renovate, consider using a home improvement loan of 203,000 FHA. This loan allows you to build the cost of repairs into your mortgage, which means you only have to worry about one payment. On the other hand, these loans often offer lower interest rates than other types of financing. However, they are also highly regulated and there are specifications for how the money should be spent.
Cash refinancing involves refinancing your existing home loan and withdrawing more money than you currently owe on your home. The excess loan is returned to you in cash and can be used for anything you want, including renovating your kitchen or remodeling your bathroom.
Refinancing your loan usually offers better interest rates than other financing options. However, it comes with a great reserve. Because your home will be used as collateral during a cash refinance, if you can’t make the monthly home improvement loan payments, you risk foreclosure.
Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (LDCVD) is more like a credit card than an installment loan, as is the case with refinancing. In this case, you will be able to borrow money against the equity in your home, as needed, up to a limit predetermined by your lender.
This flexibility makes LDCL a particularly attractive option as a renovation loan. However, like the $ 203,000 loan and prepayment refinancing, it also carries a potential risk of foreclosure if you stop making your monthly payments.
In contrast, personal loans are unsecured which means that they are not tied to an asset like your home. Rather, your loan approval is based on personal factors like your debt-to-debt ratio and your credit rating. That said, a personal loan usually has the highest interest rates of any of the options on this list.
Tips for Saving on Home Renovation Costs
Choose Your Materials Carefully
Materials are usually the most variable expense in home renovation. Using all of the premium materials can add thousands of dollars to your end costs. If you’re trying to stay on a budget with your renovations, your best bet is deciding where to splurge and where to save. As a rule of thumb, it’s best to invest as much money as possible in the main features of each room, like high-end appliances, and choose mid-range items everywhere else.
Keep in mind that big-ticket items are often priced per square foot, so you’ll need to keep the size of the room in mind when budgeting. In general, the larger the area, the higher the cost of the material.
Keep the Layout the same
In other words, the cost of moving plumbing and electrical installations can add up quickly. You can save money on kitchen remodeling, for example, if you leave appliances where they are and keep the layout as is. In that case, you can spend your money by simply adding semi-custom cabinets, new appliances, or new countertops.
The Bottom Line
Renovating an entire house will obviously be an expensive undertaking. However, careful planning helps create a realistic budget and stick to it. Use the information above to help you get an idea of the cost of a complete home renovation. With the right knowledge – and the right home improvement loan – you’ll be able to put together a financial plan that’s right for you.
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