How to Finance Home Improvement Projects and Buy a New Home At the Same Time

Whether you are making home improvements as a first step towards selling your home or renting it out, it’s possible to complete those renovations while also buying a house. While it may feel overwhelming, it doesn’t have to be. With the right resources lined up, everything will be sure to go smoothly. When planning, breaking projects down into manageable tasks will help you be more productive and goal-orientated. Here are some steps to bear in mind if you’re working on financing a down payment while also figuring out how to pay for roof repair and gutter installation.

Buy the new home.

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While buying a new home is a large undertaking, it is actually less work than the home renovation project, so getting that process started will help you move forward more quickly. Becoming a homeowner is a lot less work than managing a renovation because your real estate agent and financial lenders do the heaviest lifting. Based on your credit history, down payment, and lender options, you will be able to pick between a fixed-rate mortgage or an adjustable-rate mortgage. If you plan to stay in the home and interest rates are currently low, you are better off with a fixed-rate mortgage. However, your financial advisor can provide more insight into choosing the right lender, given your specific circumstances.

Get estimates from contractors.

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Looking at your home renovation project, make a list of everything you want to be done. Do you need a roof replacement? New gutters? New asphalt in the driveway? Tree trimming? Then you can use your list to contact contractors and get estimates for the work. For example, when looking for an Allison Park roofer, you can call Buccos Roofing, who will come out to your property and provide a free estimate, whether you need new shingles, structural roof repairs, or a new roof altogether. When you call for an estimate, explain exactly what work you need to be done and what kind of house you have, so they are prepared when they show up to the property. When calling for estimates, you want to focus on roofing contractors like Buccos Roofing, who are insured and bonded.

Some companies will provide a range for you over the phone based on the work requested. For example, Tree Musketeers can handle most tree trimming jobs between $100 and $1,200, which will allow you to look at your budget and determine what work you can get done immediately and what work will need to wait. When dealing with tree work, you also want to focus on companies like Tree Musketeers, who are insured and bonded to protect yourself and your property from damage.

Line up financing for your renovations.

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Now that you have all of your estimates, you need to consider the total cost and consider a budget for the project. One option is a bridge loan. Bridge loans are short-term loans that can provide you with the financial assistance you need to quickly complete the project. As a borrower, they will look at your ability to repay the loan to determine how much you can borrow. You can then pay off the loan over the loan agreement’s term, or if you are buying your new house undervalue, you can utilize the equity in the new home to pay off the bridge loan.

Once you’ve lined up financial assistance for the project, it is critical to stay within your budget. Often with renovation projects, things come up that were unexpected. For that reason, it is important to factor into your budget a 10% to 15% buffer for unexpected problems. For example, if your total project estimate is $20,000, your budget should be $22,000 to cover possible additional expenses. Then if you are approaching your total budget, you will need to cut back on renovations. Focus on the essential projects first (a roof repair is pretty critical while painting kitchen cabinets is not) to ensure they get done, and then complete optional portions of the renovation project as long as you are still within budget.

Keep a firm grip on project management.

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Either hire a project manager or act as the project manager, but someone needs to be on point to ensure all the contractors are showing up when they say they will and doing the work they committed to doing. The project manager will also monitor the budget to ensure everything is staying on course and act if things are not happening the way they’re supposed to happen.