From time to time, homeowners may take a step back and evaluate how well their house suits their needs. If your home isn’t exactly what you want, a remodel can help you achieve your dream space.
Before starting a remodeling project, however, you need to consider how much it will cost and how you will finance the renovation. Fortunately, there are a number of financing options available, regardless of your budget.
How Much Does It Cost to Renovate a Home?
According to industry averages, a home renovation could cost $10 to $60 per square foot, with more extensive work costing upwards of $150 a square foot. If you were to renovate an entire 2,500 square foot house, you could be looking at a minimum of $15,000.
Things like the size of the room, the types of materials selected, any underlying problems, and the extent of the work are significant factors. Cabinetry, custom work, electrical or plumbing services, and appliances will also be expenses to consider.
Inexpensive changes like landscaping, paint, or flooring often start on the low end around $15,000, but choosing to fully remodel a bathroom or kitchen could have you looking at $70,000. Structural alterations or additions often add up to well over $100,000. It all depends on whether you’re doing a small-scale, mid-grade, or upscale remodel.
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How to Pay for Renovations
Common financing methods for a home remodel include:
- Personal loans issued from a bank, lender, or family member
- Home equity loans, which offer financing based on the current value built up in the home
- Home equity line of credit, which funds multiple draws on a line of credit
- Government financing such as an FHA 203(k) loan or an FHA Title 1 loan
- Credit card purchases for the materials or labor needed
- Cash from a savings or checking account
- Refinancing your current mortgage for a lower rate or using cash-out to access equity funds
Depending on your personal finances, you may be eligible for one or more of these payment options.
What Type of Loan Is Best for Home Improvements?
The best type of loan for a home remodel depends on your unique financial situation and the scope of the project. A personal loan can be great for smaller projects, but may not provide enough money for large-scale renovations. You could also end up paying a higher interest rate than mortgage or home equity loans.
Qualifying for a government loan is beneficial because it is easier to obtain funds without having equity in the home. The rates also tend to be low. A home equity line of credit is another great option as the interest rates are low and you only pay for what you use. This does require home equity for lender approval, however. If you decide to use a credit card, be aware that most have limited funding and higher interest rates.
Having the cash on hand to pay for a home renovation is usually the best financing option for a homeowner, but this isn’t always practical or possible. That doesn’t mean that you shouldn’t pursue your dream home. With the right planning and a contractor who will be creative in giving you options within your price range, you can create your ideal space.
If you’re considering a home remodel or addition, Breyer Construction has experienced contractors who can handle your project from start to finish. We service Southeastern PA, including Berks, Montgomery, Chester, Lehigh, Lancaster and Lebanon Counties. Contact us to discuss your home renovation.