Setting a Home Improvement Budget

As enticing as a home improvement project might be, no project can be successful until a budget has been established. The right budget will keep homeowners from going deep into debt when improving their homes, ensuring that, upon the project’s completion, they can fully enjoy their revamped castles without the specter of significant debt hanging ominously over their heads.

Before beginning a home improvement project, homeowners can take the following things into consideration.

* Personal finances: It sounds simple, but homeowners must examine their finances before starting a home improvement project. Just because a bank will loan out money for a project doesn’t mean the project is affordable. Homeowners should compare their monthly expenses with their incomes, and then determine what’s left that might be able to go toward a project. Monthly expenses include everything from groceries to mortgage payments. When the comparison between monthly expenses and monthly income has been made, homeowners can get a grasp of just what they can and cannot afford.

* Credit score: Many homeowners finance home improvement projects with loans from the bank. Particularly in the current economy when banks are being forced to tighten lending requirements, securing such loans isn’t easy. Homeowners with significant credit card debt should eliminate such debt before beginning a project. Doing so serves multiple purposes. First and foremost, eliminating outstanding debt will free up more money to allocate toward the project. Eliminating debt will also make loan applicants more attractive to prospective creditors, increasing their chances of securing a loan and a lower interest rate.

* The project’s priority: Budgeting a home improvement project also involves being honest as to just how necessary the project is. For example, a man cave might be a dream project, but should it be a priority over other things around the house? If wear and tear is taking its toll on the roof, for instance, the money going toward the man cave should probably be allocated to replacing the roof instead. If a project is low on the priority list but high on the want list, re-examine those projects higher up on the priority list to determine if they are more deserving of immediate attention and funds than vanity projects.

* Overrun costs: Not every home improvement project will come in at or under budget. Many, in fact, go over budget due to a host of factors. Homeowners should not be caught off guard when a project goes over budget. Instead, plan for the project to go over budget and expect such frustration. Allocate extra money in the original budget for overrun costs. This will reduce stress and frustration, and if the project comes in under budget, then there’s extra money when the project is completed. FH119218

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