What Would You Sacrifice to Save For Your Next Home? [INFOGRAPHIC]

 

Some Highlights:

  • 95% of first-time homebuyers are willing to sacrifice to make homeownership a reality.
  • The top item that buyers sacrifice is new clothes, at 54%.
  • Even repeat or experienced buyers say they sacrificed taking a vacation or buying a new car to buy their last home.

 

Posted by The KCM Crew

New To Budgeting? Try The 50-20-30 Rule

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The 50-20-30 Rule makes budgeting simple so you can pay your bills, add to your savings, and set aside money for fun.

Budgeting isn’t always as complicated as it may seem — this simple formula makes it easy to allocate your money each month.

If you’re new to budgeting, figuring out how to manage your money each month can feel overwhelming. Not only do you need to organize, but you also have to make difficult decisions about how to spend your cash. Relying on the advice from others can help only so much, because your income and expenses are unique. Someone may be able to spend $4,000 per month on rent in Manhattan, NY, but that kind of spending may not work for you.

But there’s good news: You don’t need fancy finance apps on your phone, or complicated spreadsheets with countless spending categories to understand how much you can spend. You simply need to follow the 50-20-30 Rule.

 

What is the 50-20-30 Rule?

The 50-20-30 Rule helps you build a budget by using three spending categories:

  1. 50% of your income should go to living expenses and essentials. This includes your rent, utilities, and things like groceries and transportation for work.
  2. 20% of your income should go to financial goals, meaning your savings, investments, and debt-reduction payments (if you have debt, such as credit card payments).
  3. 30% of your income should be used for flexible spending. This is everything you buy that you want but don’t necessarily need (like money spent on movies and travel).

Keep in mind that the percentages for essentials and flexible spending are the maximum you should spend. Falling under those guidelines can leave more money for other financial goals.

How to start a 50-20-30 budget

Figure out what’s currently happening with your spending habits. First, look at your pay stubs to determine exactly how much money you bring home each month. That’s your income and what you’ll base your 50-20-30 split on. (If you’re self-employed, be careful to track your earnings and understand your average income per month so you can budget accordingly.)

Next, track your spending. Yes, every cent, from the big stuff such as rent, to the coffee that you grab on the way to work. (If you spend most of your income through credit and debit cards, these reports are easy to generate). Each of these should be categorized into the three 50-30-20 buckets mentioned above: essentials, financial goals, and flexible spending. From here, adjust your spending to ensure you’re falling into the 50-20-30 parameters. You may find that you’re overspending on stuff you want but don’t need, and that’s when it’s time to cut back.

Why the 50-20-30 Rule works

This budgeting plan keeps your personal finances simple so you can pay your bills, add to your savings, and have the freedom to use some money just for fun. And for the novice, the 50-20-30 Rule is a great starting point for learning the basics. There’s no uncertainty, your action steps are clear, and it even provides for savings, investments, and other financial goals. This makes it much more likely that you’ll stay the course over time, ultimately reaching your desired financial stability.

The 50-20-30 Rule also offers some flexibility. Do you spend more than 50% of your income on essentials? You can bend it a bit by altering the percentages to make it work better for you.

“It’s not about the exact percentage breakdown, because all budgets will be slightly different,” says Eric Roberge, a financial planner who specializes in helping professionals and entrepreneurs at Beyond Your Hammock. “The key is to take action and use a system to help you stay consistent in managing your money every month, and making sure you’re covering your expenses, being responsible by saving for tomorrow, and giving yourself some room to enjoy life today.”

 

Posted by Kali Hawlk on Trulia

 

Why Pre-Approval Should Be Your First Step

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach. 

Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” 

Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

 

Posted by The KCM Crew

Why Getting Pre-Approved Should Be Your First Step

In many markets across the country, the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

Posted by The KCM Crew

Planning for the Hidden Costs of Buying Your First Home

There’s only one way to be totally prepared for all the costs of buying a home.

You’re excited because you just found the perfect home. The neighborhood is great, the house is charming, and the price is right.

But if you’re a first-time home buyer, you might find out that the price is pretty far from perfect.

If you’re shopping for your first home, additional — and often unexpected — home-buying costs should be top of mind. These costs catch many home buyers unaware, and can quickly leave you underwater on your new home.

The best way to deal with this is by preparing yourself and making sure you have enough cash tucked away for a rainy day.

Costs coming out of the woodwork

For almost every person who buys a home, the spending doesn’t stop with the down payment. Homeowners insurance and closing costs, like appraisal and lender fees, are typically easy to plan for because they are lumped into the home-buying process, but most costs beyond those vary.

The previous owners of your home are the biggest factor that goes into your move-in costs. If they take their refrigerator when they move out, you’ll have to buy one to replace it. The same goes for any large appliance.

And while these may seem like a small purchase compared to buying a home, a few thousand-dollar appliances quickly add up — especially if you just spent most of your cash on a down payment.

Similarly, unless you negotiate it as part of your home purchase agreement, you’ll also be on the hook for any immediate improvements the home needs.

Unfortunately, these costs are the least hidden you may encounter.

When purchasing a home, it’s strongly recommended that you hire a home inspector(this costs money, too!) to ensure the home isn’t going to collapse the next time it rains. Inspectors look for bad electrical wiring, weak foundations, wood rot, and countless other problems.

Worse still, these problems are rarely covered by home insurance. If an inspector discovers a serious problem, you’ll then have to decide if you still want to purchase the home. Either way, you’ll be out the cost of hiring the inspector.

Creature comforts

Another cost is your own comfort. It’s easy to not think fully about what you are expecting from your new home until after you move in.

Are you used to having cable television? If so, is your new home wired for cable? It’s much harder to watch a technician crawling around punching holes in your walls when you own those walls.

Courtesy of Zillow Digs

Because you’re likely moving from the world of renting to the world of homeownership, you’ll probably be faced with much higher utility bills. Further, you could find yourself paying for utilities once covered by a landlord, like water and garbage pickup.

Plan ahead

The only way to face the unexpected and unknowns of home buying is with research and planning. This starts with budgeting before house hunting, and should continue throughout your search.

Look at homes in your budget that need improvements, then research how much those improvements could cost.

Nothing is worse than buying a home thinking you can fix the yard for a few hundred dollars and then realizing it will cost thousands.

There is really no upper limit to how prepared you can be. Say you find a nice home that’s priced lower than others in the area because of its age. You may save money on the list price, but with an older house you could be slapped with a much higher home insurance payment, effectively making the house more expensive in the long run.

This is where preparation comes in. Research home insurance and property prices in the areas you’re house-hunting to make more educated decisions before you ever make that first offer.

Clearly define how much you intend to put toward your down payment, then look at how much cash that leaves you with for improvements and even minor costs, like changing the locks. That way when you find a house at the high end of your range, you’ll know to walk away if it requires you to buy a new washer and dryer or upgrade the HVAC system.

Establish a rough estimate for as many costs as you can think of, and be extremely critical of homes at the top of your budget, or you could easily end up being house poor.

Know your budget and plan ahead. Buying a home is a lot less scary when you know what you’re getting into.

Posted by Jonathan Deesing on Zillow

30 Tips for Increasing Your Home’s Value

Learn ways to add value to your home no matter what your budget.

Neutral-color paint is inexpensive and adds style.

HOME IMPROVEMENTS: UNDER $100

Tip 1: Spend an hour with a pro.
Invite a realtor or interior designer over to check out your home. Many realtors will do this as a courtesy, but you will probably have to pay a consultation fee to a designer. Check with several designers in your area; a standard hourly fee is normally less than $100, and in an hour they can give you lots of ideas for needed improvements. Even small suggested improvements, such as paint colors or furniture placement, can go a long way toward improving the look and feel of your home.

Tip 2: Inspect it.
Not every home improvement is cosmetic. Deteriorating roofs, termite infestation or outdated electrical systems — you can’t fix it if you don’t know it’s broken. Hire an inspector to check out the areas of your home that you don’t normally see. They may discover hidden problems that could negatively impact your home’s value. Small problems (such as a hidden water leak) can become big, expensive problems quickly; the longer you put off repairs, the more expensive those repairs will be.

Tip 3: Paint, paint, paint.
One of the simplest, most cost-effective improvements of all is paint! Freshly painted rooms look clean and updated — and that spells value. When selecting paint colors, keep in mind that neutrals appeal to the greatest number of people, therefore making your home more desirable. On average, a gallon of paint costs around $25, leaving you plenty of money to buy rollers, painter’s tape, drop cloths and brushes. So buy a few gallons and get busy!

Tip 4: Find inspiration.
An alternative to hiring a designer is to search for remodeling and decorating inspiration in design-oriented magazines, books, TV shows and websites. Simply tear out or print off the ideas you want to try and start your to-do list. Keep it simple — when remodeling on a tight budget, do-it-yourself projects are best.

Tip 5: Cut energy costs.
The amount of money you spend each month on energy costs may seem like a fixed amount, but many local utility companies provide free energy audits of their customers’ homes. They can show you how to maximize the energy efficiency of your home. An energy-efficient home will save you money now, which can be applied to other updates, and is a more valuable and marketable asset in the long run.

HOME IMPROVEMENTS: $100-$200

Drought-tolerant plants are an excellent way to spruce up your landscaping and save money on upkeep.

Tip 1: Plant a tree.
If you aren’t planning to sell your house today, plan for the future with a landscaping improvement that will mature over time. Plant shade trees — not only will mature trees make your home more desirable but a fully grown, properly placed tree can cut your cooling costs by as much as 40 percent. Mature landscaping is also good for the environment, providing a necessary habitat for wildlife while adding valuable curb appeal to your home.

Tip 2: Low-maintenance landscaping saves you money now, adds value when you sell.
No question that shrubs and colorful plants will add curb appeal to any home, but when shopping at your local garden center, make sure that you “think green.” Purchase plants that are native to your region or plants that are drought-tolerant; these require less water and maintenance, which means more savings to you and more green in your wallet.

Tip 3: Add a money-saving luxury.
Speaking of water, here’s another way to tap into extra savings; install a water filtration system in your kitchen. Not only do these systems purify your water, they will also lower your grocery bills — no more bottled water. A water filtration system is an inexpensive addition, but it’s the sort of small luxury that homebuyers love.

Tip 4: Improve the air quality inside your home.
Air quality isn’t just about the conditions outdoors. If you have older carpets in your home, they might be hiding contaminants and allergens. The first step to determine if these need replacing is to hire a professional company to test your indoor air quality. If the results prove that your carpets should be replaced, choose environmentally friendly natural products like tile or laminate floors. Hard-surface floors are much easier to keep clean, don’t hold odors, give your home an updated look and, in general, are more appealing to buyers.

Tip 5: Save the popcorn for the movies.
Finally, what’s on your ceiling? Few structural elements date a house more than popcorn ceilings. So dedicate a weekend to ditching the dated look and adding dollar signs to the value of your home. This is a project you can tackle yourself. First, visit your local hardware store for a solution to soften the texture, then simply scrape the popcorn away. Removing a popcorn ceiling may not seem like a big change but one of the keys for adding value to your home is to repair, replace or remove anything that could turn buyers away.

HOME IMPROVEMENTS: $200-$400

If you’re too busy to keep up the yard work, hire a lawn service to keep up your home value.

Tip 1: A messy lawn creates a bad first impression.
Overgrown or patchy lawns and outsized bushes will cause your home to stand out — in a bad way. The good news is that taming your jungle is an easy fix. For a few hundred dollars, hire a lawn service company to trim your lawn and shape your hedges. Your curb appeal will go from messy to maintained without blowing your budget.

Tip 2: Cleanliness counts.
The old adage that you only get one shot at a first impression is true. So, make the interior of you home shine from the moment someone walks through the door. For less than $400, hire a cleaning service for a thorough top-to-bottom scrubbing. Even if you clean your home regularly, there are nooks and crannies that you may miss or overlook. Let a cleaning service do the dirty work to really make your home sparkle.

Tip 3: Visually increase your home’s square footage.
The size of your home dramatically affects the value, but square footage isn’t the only space that counts. Visual space or how large a home feels also counts. The key is to make each room in your house feel larger. Replace heavy closed draperies with vertical blinds or shutters to let light in — a sunny room feels larger and more open. Also, try adding a single large mirror to a room to visually double the space. Finally, clear the clutter. The more clutter, furniture and plain old stuff you have in a room, the more cramped it will feel. For less than $400, add an attractive shelving unit to an underused space and store your clutter out of sight.

Tip 4: Small bathroom updates equal a big return.
Bathroom updates are always a smart move. Even if you can’t afford a full remodel, small changes such as replacing dated wallpaper with a faux or textured finish and replacing old lighting will update the room without denting your wallet.

Tip 5: Add new energy-efficient fixtures.
A functional, decorative ceiling fan is a beautiful thing. It provides necessary light and, in warm months, creates a soft breeze reducing the need for expensive air conditioning. But, an outdated, wobbly, loud or broken ceiling fan is a useless eyesore. Replace old fixtures with new ones to make your home more enjoyable for you now and to increase the bottom line should you decide to sell.

HOME IMPROVEMENTS: $400-$750

Having an organized home saves you time and money and brings in money at the time of a sale.

Tip 1: Even small changes in the bathroom equal a big return.
A great room to update for less than $750 is the bathroom. The two rooms that benefit most from even small renovations are the kitchen and bathroom. One cost-effective change — like replacing an outdated vanity, old plumbing and lighting fixtures or adding a new tile floor — will guarantee a lot of bang for your buck and give your bath an updated, modern look.

Tip 2: Any kitchen update equals added value.
The same rule applies in the kitchen. You don’t have to start from scratch to create a winning recipe. For maximizing your home’s value, kitchen updates are key. Start by swapping out just one item, such as a stained sink or ancient microwave for shiny new stainless models. Even small kitchen updates will add big value to your home.

Tip 3: Replace any worn carpets or area rugs.
Take a look at your home’s soft flooring. Are your carpets and area rugs stained or worn? Nothing turns buyers off more than the thought that they will immediately need to replace all of the flooring in a home. Ideally, you may want to replace them all, but if a limited budget puts a snag in that plan, start by replacing the carpet in the room that shows the most wear and tear and replace the others as your finances allow.

Tip 4: Keep up with regular maintenance and repairs.
Walk around your home and make a list of all the little things that are broken or in need of repair. Individually, small repairs might not seem important, but if every room has just one thing wrong, those small things will add up to create the impression that your home has been neglected. If you don’t feel comfortable tackling the repairs yourself, hire a handyman for a day and watch your “to do” list disappear. Staying on top of maintenance today eliminates problems down the road should you decide to sell.

Tip 5: Get help with getting organized.
Hire a professional organizer for a day. They will show you how to organize various rooms in your home and teach you tricks for keeping it organized. How does this increase your home’s value? Simple — a clutter-free home appears cleaner and larger, which is more attractive to homebuyers and therefore more valuable.

HOME IMPROVEMENTS: $750-$1,000

Installing new appliances is a guaranteed way of increasing the sales price of your home.

Tip 1: Go tankless.
Upgrade your standard water heater for a tankless model. Most old-fashioned water heaters keep 50 or so gallons of water hot, seven days a week, 24 hours a day, whether you use the water or not. Tankless water heaters heat only the water you need as you need it. Not only will they save you money now, but they’re an eco-friendly and cost-effective update that today’s homebuyers are looking for.

Tip 2: Upgrade your appliances.
Eighty-six the old-school appliances for sleek new energy-efficient ones. An appliance with an Energy Star label has been certified by the government to use 10-50 percent less energy and water than conventional appliances. Matching stainless appliances will not only look great now, but will make your home shine brighter than the competition should you decide to sell.

Tip 3: Go for the green.
Everyone loves a yard with thick, green grass. For less than $1000, in a weekend’s time, you can replace your existing patchy mix of weeds and grass with fresh new sod. You’ll be amazed at the difference this one change will make in your home’s curb appeal and value.

HOME IMPROVEMENTS: $1,000-$1,500

An upgrade to the entrance of your home will leave a lasting impression with potential buyers.

Tip 1: Spruce up your ceilings.
One of a room’s most neglected spaces, the ceiling, makes up one-sixth of a room’s total area. Updating your home’s ceilings will net a lot of bang for the buck while adding architectural interest. First, if you still have popcorn ceilings, hire a contractor to scrape them smooth. To add a sophisticated custom look to a smooth ceiling, install crown molding or box beams for a coffered look. Ceiling millwork, an attractive feature prevalent in older homes, is rarely found in newer construction. Adding small touches like these will help your home stand out from the pack.

Tip 2: Update your home’s entrance.
The look of your front door and entrance play heavily into the overall curb appeal of your home. As visitors enter, the front door serves as the transition into your home and is part of their first impression. Entry doors are architectural components that should complement your home’s overall design, not detract from it. If your existing front door isn’t up to par, head down to your local home improvement store for a more energy-efficient and attractive replacement. Whether you choose a solid wood door or one with decorative stained or cut glass panels, a welcoming entrance will definitely increase your home’s bottom line.

Tip 3: Consult a design pro.
If you’re unsure of which design style or paint color to use, hire a designer. They’ll use discriminating taste and a trained eye to help with making the big decisions. Also, remodeling your home with a cohesive plan in mind makes all of your choices easier and ensures a pulled-together finished look. So, when you get the right mix of time or money, you’ll know exactly which project to take on next.

HOME IMPROVEMENTS: $1,500-$2,000

Landscaping makes a huge difference in the curb appeal of your home.

Tip 1: Save on air conditioning costs.
Consider installing a whole-house fan. They’re a great alternative to air conditioning because they use only one-tenth the electricity of air conditioners, saving you money. Whole-house fans are considered a “green” home improvement, which is a popular selling feature with today’s homebuyers. As the cost of electricity continues to skyrocket, green energy alternatives will only gain in popularity.

Tip 2: Brighten up.
A “bright” way to increase the value of your home is to lighten up. Adequate lighting in a home makes a big difference. Not only does a bright, well-lit room feel more cheerful but it also makes spaces feel larger and cleaner. A well-lit room also shows that you have nothing to hide, so should you decide to sell, prospective buyers will feel at ease when touring your home. Hire an electrician to add recessed lights to a dim kitchen or family room or to brighten up a formal dining or living room with elegant sconces. You’ll enjoy the bright effect now and your home will feel warmer and more welcoming to homebuyers.

Tip 3: Add the right landscaping and watch your home’s value grow.
For less than $2,000, hire a landscape designer to create a plan that will make your home’s exterior really shine. For maximum impact, plant mature trees or fast growing varieties; these can be pricy but they will instantly make your home feel more established. As your landscaping grows, so will your home’s curb appeal and value.

HOME IMPROVEMENTS: $2,000-$3,000

Full-view glass doors provide elegance and drama that improve the value of your home.

Tip 1: Kitchen or bath remodels are always a safe bet.
Improving your home is a solid investment at any level — but if you have up to three thousand dollars to spend, a great place to start is by upgrading either the kitchen or bath. Either room is a good choice and you don’t have to do a complete floor-to-ceiling remodel to reap financial benefits. In fact, modest kitchen or bath updates can be your best bet for a big return, netting, on average, an 80-85 percent return.

Tip 2: Protect your investment.
For most people, their home is their single largest investment, so treat it that way. Hire a financial planner to work out a strategy for protecting your investment by analyzing all of the financing options that are available. A financial whiz can tell you if you should refinance to lower your monthly payments or pull out some equity to pay for value-adding improvements.

Tip 3: Bring the outdoors in.
Consider turning two standard windows into an opening for beautiful French or sliding glass doors. Full-view glass doors really brighten up the space and a light and airy room is always more attractive. Also, with a view of the outdoors, the room will feel much larger. Another bonus is that modern doors are energy-efficient, cutting down on heating and cooling costs. That means more cash in your pocket now and a financial bonus should you decide to sell.

HOME IMPROVEMENTS: $3,000-$5,000

You will get extra points by installing eco-friendly flooring.

Tip 1: Add closet or garage storage.
Realtors agree that top on most homeownes’ list of wants is ample storage space. For less than $5,000, consider upgrading your home’s storage by adding custom shelving systems to a closet or garage. The first step to really getting organized is de-cluttering. Start by sorting your belongings, then stash them away in your new organized closet or garage to really maximize your home’s value.

Tip 2: Green flooring choices equal more green in your wallet.
Worn, tired carpet will not only turn off homebuyers, but it can make you feel worn and tired too. Replace it with the hottest trend in flooring: renewable, environmentally friendly bamboo. Solid-surface floors are easy to keep clean and give your home an upscale look and feel. Green flooring choices, like bamboo, minimally impact the environment and are a big selling point to today’s environmentally conscious homebuyers.

Tip 3: Resurface concrete.
Replacing the cracked concrete surfaces around your home can cost a small fortune. But for a fraction of that cost, concrete can be resurfaced in a multitude of colors and finishes. Consider adding a cobblestone finish to your driveway, a brick look to an old walkway or a slate finish around the pool or patio. Whichever texture you choose, it will be a huge improvement over standard concrete and potential homebuyers will really take notice.

HOME IMPROVEMENTS: $5,000 AND UP

A fresh coat of exterior paint will take the home’s curb appeal from so-so to wow.

Tip 1: Refresh the exterior paint.
The condition of your home’s exterior is key to the overall curb appeal, so refresh that facade with a coat of paint. Fresh exterior paint will not only preserve and protect your home’s exterior siding — the right paint color can make a dull home dazzling. By the same token, a house painted with an overly bright or overly bland color will make a house less appealing and hurt the value, so choose your colors wisely. Should you decide to put your house on the market and the exterior paint looks bad, a buyer will assume that the interior of the home has been neglected too and drive right past.

Tip 2: Go solar to save some green.
Save energy bill greenbacks by going green with a solar water heater. The installed price can cost up to $5,000, but these systems can slash your hot water bills by as much as 80 percent and attract energy-conscious homebuyers should you decide to sell. Install a solar water heater where there’s unobstructed southern exposure and you’ll have savings made in the shade.

Tip 3: Kitchen remodels are king.
Hands down, one of the biggest returns on investment comes from a kitchen remodel. Most experts agree that if you plan on updating only one room in your home, it should be the kitchen. Large, open kitchens have become the social hub of the modern home. High-end touches like granite countertops, richly stained custom cabinets and energy-efficient stainless appliances are the gold standard in modern kitchens. Experts agree that kitchen remodels return an average of 80 to 85 percent of every dollar spent. You can expect an even higher return if you are remodeling a really outdated kitchen.

Posted on The DIY Network

 

 

 

 

 

 

 

 

7 Easy Ways To Budget Kitchen And Bathroom Remodeling Costs

Pro tip: Before you tackle kitchen or bathroom remodeling projects, make sure you’ve got a thorough budget in place.

This streamlined budget technique for kitchen and bathroom remodeling will make sure you won’t be surprised at the final project cost.

Like a relationship, a home remodeling project is the most fun in its earliest stages. You get to pin inspiration photos to your heart’s content, your brain is filled with all sorts of grandiose design ideas, and you study catalogs, jotting down minor details like the virtues of brass versus nickel versus copper faucets (along with a list of SKUs for the ones you like best).

Then the word “budget” rears its ugly head. Soon, your dreams of high-end countertops and high-tech appliances come crashing down, as you mull over labor costs and not-so-exciting project elements like electricity and plumbing. Even if you can afford to turn your design vision into a reality, it’s still a puzzle trying to work out how much to allocate for the dizzying array of costs that accompany kitchen and bathroom remodeling projects.

But have no fear: We are here with a handy guide to anticipating project costs, avoiding last-second expenses (and emergencies!), and places where you can cut down on costs without necessarily sacrificing style. So don’t scrap your remodeling plans altogether in favor of searching Seattle, WA, homes for sale, thinking your dream bathroom has just got to be out there somewhere. You can do this! Here’s how.

1. Hire a home inspector

Although it adds an initial cost to your project, hiring a home inspector to take a close look at the areas you plan to renovate can help prepare you for any unpleasant surprises uncovered during remodeling. Rotted wood subflooring, anyone? Knowing what pitfalls lie ahead can help you plan for them at the start — which will help keep your actual budget closer to that original estimate.

2. Budget your remodeling costs

According to the experts at the National Kitchen and Bath Association, you can anticipate spreading your budget across these categories, so you can get a dream kitchen like the one above in the home for sale at 3414 E. Shore Drive, Seattle, WA 98112.

Kitchen remodeling:

  • Design fees: 4%
  • Installation: 17%
  • Appliances and ventilation: 14%
  • Cabinetry and hardware: 29%
  • Countertops: 10%
  • Lighting: 5%
  • Flooring: 7%
  • Doors and windows: 4%
  • Walls and ceilings: 5%
  • Faucets and plumbing: 4%
  • Miscellaneous: 1%

And if you dream of a master bath with a spectacular open shower like this one in the home for sale at 230 Tryon St., 1204/1304, Charlotte, NC 28202, make it happen with these percentages in mind.

Bathroom remodeling:

  • Design fees: 4%
  • Installation: 20%
  • Fixtures: 15%
  • Cabinetry and hardware: 16%
  • Countertops: 7%
  • Lighting and ventilation: 5%
  • Flooring: 9%
  • Doors and windows: 4%
  • Walls and ceilings: 5%
  • Faucets and plumbing: 14%
  • Miscellaneous: 1%

These guidelines for budgeting kitchen and bathroom remodeling projects will help prevent sticker shock when it comes time to read bids (basically, a fixed-priced estimate) from contractors. The contractor bid sheet will give an in-depth rundown of every part of the remodeling project, including the specific costs for the job, plus a potential payment schedule. Although the contactor’s bid is in writing, it’s not set in stone — if you want to upgrade certain materials, or additional repairs need to be made after the project starts, the contractor will update the bid with a change order for you to approve.

3. Be upfront (and honest) about the total budget

Having a clear budget for a remodel sounds like an obvious first step, but being frank about finances can be awkward for some of us. “Sometimes this conversation can be uncomfortable, but it’s so easy to overspend on the kitchen and bathroom,” says Anne Reagan, editor-in-chief of Porch.com, a startup that connects homeowners with remodeling professionals. “These two rooms can be very expensive: The national average kitchen remodel cost is anywhere between $20,122 (for a midrange, minor kitchen remodel) to $119,909 (for an upscale, major kitchen remodel).” Since the timeline also impacts costs, know that having to rush product orders will quickly drive up the bill.

4. “Do I need a home permit for my remodeling project?”

Maybe. Things like adding a new gas line will definitely require a home permit. “Very often, the professional just gets permits on behalf of the homeowner, but a homeowner is responsible for making sure it’s done properly,” Reagan says. Make sure to ask about the cost of pulling home permits from the get-go and ensure they’re included in your budget.

5. Avoid scope creep in construction projects

You know how adding a piece of furniture to a room occasionally leads to even more decor purchases, because something so new ends up calling attention to the more well-loved items in the room? A single-room remodel can inspire the same makeover madness, something the pros call “scope creep.” “Scope creep can be costs involved in discovering larger issues (like major plumbing repairs, mold, or hot-water-tank issues) as well as the idea of ‘… while we’re at it, let’s also remodel this,’” says Reagan. “I can’t think of anyone who has remodeled a kitchen or bathroom and stopped right at the entrance to the door — very often the master bath remodel involves the bedroom, and the kitchen may involve the dining room.” Keep boundaries in place to avoid turning a single-room remodel into a total home overhaul.

6. Think beyond sticker price

When looking at your choices for things like countertops or appliances for your kitchen remodel, you first look at the price tag, right? But what you may not be considering is the other costs needed to get that dream countertop into your kitchen. These are the “associated costs.”

“For example, if you want marble countertops, you’ll need to purchase the entire slab (even if you don’t need the entire slab) and pay for cutting fees, finishing fees, edging, delivery, and more (costs vary by region and supplier). So not only is marble on the high end per square foot, [but also] there are other higher installation costs associated with this material,” Reagan says. The same is true for anything custom to your space, including tile, flooring, wallpaper, etc. So before you tackle a challenging kitchen renovation like the one above, inside a church-turned-home-for-sale at 653 Dolores St., San Francisco, CA 94110, make sure you’re truly up for the challenge.

7. “Can I be my own general contractor?”

Only take on the task of acting as your own general contractor on big projects like kitchen and bathroom remodeling if you can handle being solely responsible for hiring subcontractors, sourcing materials and accessories, and making sure everything arrives on time. By taking on the task of sourcing these items, you can save big — not only on the items themselves, but you can avoid any excess project-management-type costs as well. In addition to shopping sales, check out architectural resale shops for bargains. Habitat for Humanity ReStores often have everything from tiles to toilets to the occasional appliance at a huge discount (plus, you support a good cause!). While some states require that general contractors be licensed and insured, homeowners can frequently skirt these costs by acting as owner-builder — as long as you hire licensed subcontractors to complete the work.

There are always other tasks you can take on to avoid extra out-of-pocket expenses. Reagan has just a few words of caution: “I think a person needs to be very, very honest about their skill level and time to dedicate to this project … even experienced DIYers find that they need to call in an expert plumber or electrician to do certain tasks (especially the tasks that require a license).”

Posted by Brie Dyas on Trulia