6 costs homeowners overlook in a remodel

If you’re thinking about remodeling your home this year, you’re not alone. As many shifted to working from home in the pandemic, quite a few homeowners decided that they want to make some changes, too, from bathroom and kitchen renovations to outdoor upgrades.

a room with a sink and a window: A newly renovated bathroom in a home in Tacoma, Washington

© Artazum/Shutterstock
A newly renovated bathroom in a home in Tacoma, Washington

Whatever project you have in mind, the cost of a remodel isn’t limited to the materials you’ll need or the contractors you’ll hire. As you look ahead to cooking in that new kitchen or turning that spare bedroom into an office, be sure to budget for these often-overlooked expenses.


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6 hidden costs of home remodeling

1. Securing permits

Many remodeling projects require a permit, which costs approximately $1,220, but can range from roughly $440 to $2,000, according to Angie Hicks, co-founder of Angie’s List.

“Most renovations call for permits, especially if you’re updating electrical or plumbing,” Hicks says. “In big cities, permits can cost up to $7,500, while in small towns they may be as low as $100.”

2. Installing appliances

You can’t just buy that new refrigerator – you also have to get it up and running, which costs money. This is especially the case for appliances that aren’t simply plug-in-and-go.

“Appliances that require complex wiring or plumbing labor, such as dishwashers, tend to cost more,” Hicks says. “Similarly, switching a gas stove over to electric, or vice versa, bumps up appliance installation cost. Running a new gas line, adding a new circuit and breaker and refrigerators with ice makers, which need a water hookup, can all raise the cost of your renovation.”

3. Dining out or renting short-term

Consider how the work might impact your routine, and for how long. If your home is enveloped in a cloud of dust during the demo or construction phases of the project, for instance, you’re not going to be able to prepare meals there, or potentially even be able to sleep there. A few weeks of eating lunches and dinners at restaurants, or renting an alternative space to live in, can add up quickly.

4. Discovering those not-so-nice surprises

Tearing up your home can also reveal some issues you didn’t know existed, Hicks notes, which will undoubtedly increase your costs as you pay to remedy them.

“Damage to areas not visible until the project begins; plumbing or wiring that needs to be updated to meet current building codes; termites, lead, mold, radon and other circumstances can easily move a home remodeling project beyond budget,” Hicks says. “Many contractors recommend adding an additional 10 percent to 20 percent buffer to your project’s overall cost to be prepared to deal with these types of issues.”

5. Cleaning up

The job’s done, but your final tally isn’t. That’s because cleaning up after a remodeling job typically involves more than a broom and dustpan. According to Hicks, clean-up costs range between $275 and $650.

“Construction leaves a lot of dust and debris, so you’ll want the job to be thorough,” Hicks says. “It includes everything from ridding the walls of scuff marks and smudges to waxing floors and scrubbing windows.”

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6. Expanding your homeowners insurance coverage

Your dream remodel is finished, but now, it’s time to make sure it’s protected. Since a renovation can increase the value of your home, you might find you need to pay a bit more for your homeowners insurance to bring your coverage up to an appropriate level. Some common home improvements that can affect your homeowners insurance include additions and installing a pool.

How to budget for common home renovations

These often-neglected costs are just one piece of a remodeling project. To create a working budget, first decide how much you’re willing and able to spend on the project.

“Come up with a firm number for the overall remodel first,” Hick says. “If you try to make budget determinations feature by feature or appliance by appliance, you can quickly exhaust your budget.”

Every project is different, so the cost can depend on a range of factors, including the number of rooms, the location of your home and the extent of the project, Hicks says. You’ll also need to think about what kind of materials you want to use.

“More premium or rare materials will cost more, so if you’re trying to keep to a low budget, it’s important to decide beforehand where you’re willing to compromise,” Hicks says. “You’ll have to make choices when it comes to cabinets, countertops, sinks, faucets, flooring, lighting and more, and each of these decisions will impact your final cost.”

To help you get an idea of what you can expect to spend, consider these ranges for some of the most common home renovations:

Kitchen remodel

  • Range: $13,000-$37,000
  • According to HomeAdvisor, kitchen remodels range from about $13,000 to $37,000. The scope of the project can impact this cost considerably, however, as well as where you live. Case in point: The same $56,000 major kitchen project on the Atlantic Coast in Florida could cost more than $77,000 in San Francisco, data from Home Depot shows.

Bathroom remodel

  • Range: $6,100-$15,300
  • Bathroom renovations can cost anywhere from about $6,100 to $15,300, according to HomeAdvisor. If you can keep the same floor plan, though, your budget can stay towards the lower end. Bigger changes require more money – for example, it can cost $5,000 or more to convert a half bath to a full bath, HomeAdvisor reports.

Basement finishing

  • Range: $2,800-$34,000
  • Finishing a basement costs between $2,800 and $34,000, according to HomeAdvisor, but adding a bathroom can bump it up by another $15,000. Of course, the smaller your basement, the lower your costs.

Building a home office

  • Range: $5,000-$22,000
  • Depending on the size of the project, adding a home office ranges from $5,000 to $22,000, HomeAdvisor reports. If you can manage to convert an existing bedroom or other area of your home instead of adding square footage, you might be able to eliminate major expenses like flooring, soundproofing and a custom closet.

Adding a deck

  • Range: $4,100-$11,200
  • Building a deck can run you $4,100 to $11,200 on average, according to HomeAdvisor. Size matters, though: If the deck is under 200 square feet, you’ll likely be on the lower end of the pricing spectrum.

How to pay for renovations

Once you know what you’re willing to pay, it’s time to consider how you’re going to cover all the costs. If you can’t pay for the project in cash, you can explore home improvement financing options, such as:

  • Cash-out refinancing – A cash-out refinance can give you two victories in one: You can take advantage of record-low rates with a new mortgage and get the money you need to pay for your remodel. It’s best to make sure that the new loan saves you money in the long term, however. Also, remember that refinancing your mortgage comes with closing costs that’ll be somewhere between 3 percent and 5 percent of the new amount you borrow.
  • Home equity loan – With a home equity loan, you can borrow money based on the equity you already have in your home. You’ll get the cash in one sum, and the repayment process will be fairly similar to a traditional mortgage, with monthly payments and a fixed interest rate. The risk of a home equity loan is that you’re using your home as collateral, so if you don’t make the payments on time, you could lose the property.
  • Home equity line of credit – A home equity line of credit (HELOC) is similar to a home equity loan, but with two major differences: First, it’s a line of credit, so instead of one sum, you can use the cash as needed throughout the project. Second, the rates are variable. Again, your home is the collateral here, so you can’t afford to miss a payment.
  • Credit cards – If your remodeling costs are fairly low, you might consider using a credit card to pay for the project. There are some great credit cards for renovation projects, and many don’t charge you any interest during an introductory period. If you can pay back all the charges before that period expires, you’ve won the game by not paying any finance charges to upgrade your property. However, if you fail to pay off that balance, you could wind up paying for that project long after the remodeling shine fades.

Each of these options has different implications regarding how much you can borrow, how much interest you’ll pay for the money and when you’ll need to pay it back, so consider these factors as you decide how to pay for your remodel.

It’s important to remember, too, that a remodel might do more than help you enjoy your home – some renovation projects can make a big difference when you sell your home.

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