You must be asking how much cost of home remodeling is too much compared to the amount you will gain if you sell. How could you keep within your budget once you get too excited spending the little or no money you have in adding value to your home? You might just end up realizing that the daunting cost of home remodeling could put you in a spot where you would need to recourse for a more challenging construction loan. However it all might just turn out more than you hoped for, more than the amount inside your pocket.
First to ask is if you are in the first place qualified for a construction loan to lift some weights off of your cost of home remodeling. Construction mortgage companies require that you own your lot. This is to ensue that the bank has a way to get back their investment or collateral if you fail to accomplish the mortgage payment; if not then you might need to pay a premium. Then you can proceed to the 1-year loan plan to provide for your cost of home remodeling. The good thing now is that you are not obliged for the full construction loan amount. You only have to pay interest for the amount you actually borrow each draw (which have service charge for each) so you won’t really be carrying the full mortgage until the end of your construction. Still, you need some ready cash to pay your contractors to keep them working knowing full well they won’t get fully paid until the work is finished. Best of all, you need to learn how to budget.
Be sure to account all expenses to be drawn, from the contractor, plumbers, electricians, masons, excavator, landscaper, designer, etc. to the material costs for the drainage, windows and rood, even paints. Put into order these quotes. Also notice that the mortgage company will not agree to your loan unless you have a cost overrun buffer. And then you need to supply permits, survey, and a copy of your floor plan so their appraiser could inspect your property and determine whether you project could appraise for the amount of your loan.
So far these will be the immediate cost of home remodeling via a construction loan. Remember that you also have the option of returning the money you didn’t get to use. Just make sure to follow the rule – ‘estimate high but spend less’. This will let you sleep at night and in the end, you might just be please to gain the extras.