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6 Steps to Setting a Remodeling Budget You Can Live With

How to set a remodeling budget that will keep you out of the dog house.

Inspired by all the home remodeling shows on television? If so, you’re not alone. American homeowners spent $340 billion in 2018 on improvements and repairs. Renovating your home can be an exciting but stressful time. Most people find that their renovations cost more than expected, so it’s important to start with a solid budget.

Take these six steps to successfully set a budget for your home renovation.


Make a Wish List

Draft your wish list, then prioritize it, by ‘want’ versus ‘need.’ Admittedly, some projects are more exciting than others, but making essential repairs, especially those that protect the value of your home, should always be top priority. For example, if your roof is leaking, a repair or replacement falls into the ‘need’ category, so be sure to include this in your budget before anything else.

Know Your Home’s Value so You Don’t Overbuild

Before you begin a project, make sure you don’t put more money into your home than it is worth. Use an online home valuation site like Zillow to assess the value of your home and compare it with others in the neighborhood. Evaluate the cost of what you plan to do against how much it will add to your home’s value. Even if you don’t intend to sell your home anytime soon, consider consulting a local realtor. They can give you an approximate idea of what your home is worth both before and after your renovation.

Prioritize your Planned Improvements

Prioritize your wish list according to need and to the value your improvements will have on your home, then decide what you can afford to spend. According to industry experts, the top remodeling projects in 2018 in terms of their return on investment (ROI) included garage or entry door replacement; addition of a wood deck; minor kitchen or bathroom remodels; and replacement of your roof, siding and windows.

Do Your Homework

When you show contractors specific examples of what you hope to achieve with the renovation, it will help you get more accurate bids. Do research and gather photos to show what you’d like your house to look like. Consider visiting a local lumberyard or home center to gather information. For example, a conversation with a local expert on window or siding replacement options will help you become a more informed consumer.

Get Bids

Get names of recommended contractors from friends and neighbors. Be realistic; if you know you only have $20,000 to spend on a kitchen remodel, tell the contractor up front. A good contractor will make suggestions on ways to get the most from your budget. Look for detailed estimates and ask questions to determine exactly what is and is not included, so you can make accurate comparisons between bids. For example, some contractors don’t include appliances in their bid, or they include an ‘allowance’ for things like tile or light fixtures. Check to make sure the allowances are realistic for your expectations. Make sure tax is included in the bid, agree to a timeline, check their references, and verify that the contractor is licensed, bonded and insured before you sign a contract.

Set Aside Money for Contingencies

Many projects begin only to find unanticipated surprises during the renovation that add to the overall cost. Make sure to designate some portion (usually 10 to 20%) of the total budget to handle the unexpected.


You’re on your way to getting your dream home!

If your renovation is a large project, consider a home equity loan from Alaska USA Federal Credit Union. Contact us to get started!

Contact Alaska USA Federal Credit Union

Did you know?


The most common reason people exceed their renovation budget is because of changes. Do as much homework as you can up front, then do your best to make a plan and stick with it.

Alaska USA offers two types of loans you can use for home renovations:

  • Home Equity Loan – Often used to finance a major purchase like remodeling, a home equity loan uses the equity you’ve built in your home as security. The fixed-amount loan is taken in one lump sum to be paid back in regular payments, over a specified term.
  • Home Equity Line of Credit (HELOC) – Like the home equity loan, this loan is based on the equity you’ve built in your home. A HELOC is a line of credit you can access any time, in any amount needed up to your loan limit.

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