Renovating a property is a significant undertaking but can seem overwhelming when you don’t have a plan or you don’t know how to go about it. Whether you are just performing home improvement to raise the property’s value or you want to restructure the property, you need a plan. So, here are 3 reasons you need to have a plan before starting your renovation work.
To Set a Realistic Home Renovation Budget
Setting a realistic budget is one of the top reasons you need to have a plan before home renovation. An honest and accurate budget helps avoid unnecessary and unexpected costs for your home renovation. Apart from the work involved in the renovation of a property, there are also some other expenses you need to factor into the home renovation budget to make it a successful endeavor. Expenses like reconnection fees, council fees, legal fees, contingency fees and so on should be included to prevent under-budgeting.
On the other hand, to avoid unnecessary and unexpected renovation costs that may be caused by over-budgeting, get quotes from different contractors, stop comparing your home to reality TV shows like HGTV and be honest and straightforward with your contractor.
To Easily Secure a Loan
Home renovation cannot be successful without financing and to qualify for a loan, you are required to have a plan. A detailed renovation or rehab list makes it possible for the lender to have a better understanding of the scope of the project and thereby making it possible for them to finance the project. So, if you are planning a renovation on your property, details matter! Make sure you include the necessary details from stripping down to studs, adding luxury and even to finish.
Like already said above, having a plan helps set a realistic budget. This means that with a detailed renovation list, each step would be tailored to a cost, which would make it easy to have a glimpse of the total cost of the project. The benefit of having a detailed rehab list with realistic renovation costs is that it would be much easier to secure a rehab loan from the private or hard money lenders.
To Know the Loan Type that is Appropriate for the Project
One of the numerous benefits of having a detailed rehab list is to know the type of financing you qualify for. When planning to take a rehab loan, it is important to know whether you are eligible for a loan or not. This will not only prevent you from running into problems but will also save you unnecessary stress. Apart from this, a detailed rehab list will help the lender find the most appropriate rehab loan types for you and also guide through the lending processes.
Moreover, having a detailed rehab list when applying for a loan is vital for the property appraisal to understand what the project is all about. It helps your loan officer to decide the best loan for you either 401K, VA, USDA loans or other renovation loans available.
Renovating a house is an important and major undertaking that can be overwhelming, but in the end, it is usually rewarding — if done right! If you want to perform a major renovation on your property, it can be tempting to just go all out without pre-work planning. By reading this article, you’d have learned the benefit of planning and I believe you’d never want to go into the project with a preliminary check.