Planning for Financing a Home Renovation Project: What to Reno?

Planning for Financing a Home Renovation Project Is One of the Most Important Steps, and the Best Way to Start Is by Considering the Best Renovation Targets in the Home.

Financing a Home Renovation Project

If you’re thinking about financing a home renovation project, the price tag is one of the most important details for you to pin down. You should be balancing your priority list for renovation goals with your financial situation and access to home refinancing loans to find the right balance that maximizes the value of the effort without stressing your budget beyond what you can afford, and you should be thinking about these priorities as you shop around for options and negotiate with your original mortgage bank. The following are some of best “bang for buck” home renovation options to consider so you can start to get an idea of how much financing you might need.

People generally talk about remodeling the kitchen, then the bathroom(s), then addressing curb appeal as the top three best remodels in terms of resale value. The reality is that there are a number of very specific remodeling options, and things like an exterior deck or new window fittings for energy efficiency might be more relatively valuable for your specific region, so it’s a good idea to do some research first. That being said, your remodel list probably includes at least one of the kitchen, bathroom, master bedroom, living room, and front of home or front yard.


The kitchen is the obvious best first choice because people love food, cooking, and enjoying the part of the house where they tend to spend the most time. Upgrades should focus on those advantages as well as energy efficiency. Upgrading appliances and hardware for efficiency, style, and going green is a relatively easy fix. Tiling, countertops, sink hardware, and cabinet doors are other superficial upgrades that can bring a kitchen back to life.

If you want to gut the kitchen to improve the natural flow, add storage, or reorient the kitchen and move walls, costs go up. They get even worse if you want to move the location of the sink or stove, because this requires redoing piping for water and gas. However, this kind of extensive renovation can be worthwhile if you have an old home and the kitchen can’t accommodate modern appliances, for example. As always, the cost comes from the expensive labor, the people necessary to redesign the space, demolish the old kitchen, and rebuild the walls, floors, ceiling, and lighting for the new kitchen. This can make putting an estimate together difficult, because if you don’t already have an architect to rough out plans and a few contractors to offer bids, it’s harder to price out the actual project. Either ask around for similar projects’ price tags from your neighborhood or try and find interested contractors to get unofficial bids.

The essential thing to remember when thinking about kitchen renos is that light, cleanliness, function, and comfort will determine how the market values your new space. So the details – lighting tracks, the height of the ceilings, the materials you choose – have a huge impact on the value you get.


Many of the same general ideas from the kitchen apply to the bathroom. The more significant, in-depth, and labor-intensive the work the more it will cost. So refacing the counters under the sink, changing the paint, and maybe adding some new tile, lighting, and a shower head can spruce up the space at a very reasonable price.

If you want bigger impact, replacing sink hardware, changing the type of shower, and replacing the tub all require a bit more investment but don’t add a ton of labor. But if you’re going to add sinks, expand the shower, move a wall, and rework the plumbing, you’re looking at a costly, high-value renovation where again, details and the cost-to-quality ratio of labor will determine your reno’s value.

Additional Considerations

When you start focusing more on the type of renovation project you want to do and begin pricing out upgrade options to nail down how financing a home renovation project will work for you, keep these caveats in mind. You don’t want to have the most expensive home in your neighborhood in most cases, because this will discourage buyers. This may mean you shouldn’t go for the most high-tech appliances in your kitchen reno, or should consider not knocking out an outer wall to extend the master bathroom, if your primary concern is being able to get the value from the reno back when you sell the home in the near future.

Another thing to remember is that neutral upgrades perform the best. Personalized touches and trendy add-ons may look great, but they don’t appeal to most buyers. So you should try to keep these kinds of changes to temporary and superficial details and focus on more neutral major elements like countertops and fixtures.

Lastly, remember that when it comes to justifying those mortgage refinance payments you’ll face, you want to eliminate headaches and be able to appreciate the changes once the renovation is finished. This requires quality work and planning a bit of flexibility into your budget to deal with surprises that might come up like mold, rot, or compliance with new building codes. If you have to scale back the size of your renovation plans to ensure you get a reliable contractor with a great track record and to keep that room in your budget, this is better than stretching your home renovation financing budget, getting a loan you can’t afford, or skimping on the quality.

When it comes to figuring out financing for a home renovation project, these are the best places to start thinking about your reno so you can start pricing out your financing options before you sign anything with a contractor.