Home remodeling is a popular way to improve the functionality and aesthetic appeal of your home, and a home equity line of credit (HELOC) is great way to finance a successful remodeling project. However, without a home remodeling strategy and a solid action plan, even well-funded projects can fail to meet expectations.
These four tips will help ensure a successful outcome for your remodeling project.
1. Create a strategic plan
The first step in creating a strategic plan for home remodeling is to determine the scope of the project. This will involve setting specific goals for the remodel, such as increasing energy efficiency, improving accessibility, or creating more living space. The scope of the project will inform whether or not you will need to consult with an architect to create blueprints or sketches of your finished project.
It also makes sense at this point to decide which tasks you can tackle yourself, and which ones will need to be done by a professional. You’ll also want to check local zoning laws to determine any permit requirements.
Once you have a clear understanding of what you want to achieve, you can then create a detailed plan for the work to be done, including a timeline and a budget.
2. Cost Estimation and Budget Planning
Next, it's important to create an overall budget for your project. In addition to researching the cost of labor and materials, you should also include funds for permits and the cost of decorating, landscaping and any other cosmetic touches. You also need to decide if you can stay in your home during the project, or if you’re going to have to relocate during construction, and include those costs in your overall project budget.
If you decide that your project should be done by a professional, start the process of researching and identifying an experienced licensed contractor. A professional home improvement contractor will estimate the cost of materials and labor, and give you a projected timeline for the completion of your project.
As you’re interviewing contractors, try to find one who is licensed and insured, experienced at completing the type of project you’re planning, can provide references, and is someone you’re comfortable communicating with.
A reputable contractor won’t ask for full payment upfront, and it’s important to agree on terms and a payment schedule before construction begins.
3. Apply for a HELOC
Now that you've created a detailed project plan, hired a contractor, and gained a solid understanding of the costs involved, it’s time to apply for a home equity line of credit to finance your remodel.
Why a HELOC? It’s a great option for financing a complex and ongoing major remodeling project. A home equity line of credit is a flexible, revolving line of credit that allows you to draw funds during your draw period up to your credit limit.
When applying for a HELOC, you'll need to provide the lender with information about your income, employment history, and credit history. Your lender may order an appraisal to determine the current value of your home and the amount of equity you have.
It's important to shop around for the best HELOC rate, as interest rates and fees can vary significantly between lenders.
4. Managing Funds and Creating a Contingency Plan
Once you have secured your HELOC, you'll need to manage the funds carefully in order to stay within your budget. Be sure to prioritize spending based on the most important aspects of the remodeling project, and avoid any unnecessary expenses. Additionally, it's a good idea to have a contingency plan in place in case the project takes longer or costs more than expected.
Plan for a successful remodel
A well-planned home remodeling project can greatly improve the value and enjoyment of your home, and a HELOC can provide the necessary funding to complete your project. By creating a detailed plan, researching costs, and managing your funds carefully, you can create a home that meets your needs and exceeds your expectations.
A Hancock Whitney banker can assess your project details and your personal financial situation to recommend the best financing solution for you. Visit a nearby financial center, or call 1-877-844-4948 option 1 to speak with a Hancock Whitney banker.
Sources:
BudgetDumpster.com, The Ultimate Guide to Planning a Home Renovation, https://www.budgetdumpster.com/blog/ultimate-home-remodeling-project-plan/
Bankrate.com, Smart Ways to Use Your Home Equity for Remodeling, https://www.bankrate.com/home-equity/home-equity-for-improvement-renovation/
The Balance, How to Use a Home Equity Line of Credit for Home Renovation, https://www.thebalancemoney.com/using-a-heloc-for-home-renovations-4771542
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