Big HOME Remodels

We took out a bridge loan, then rolled it over into a primary mortgage once the construction was completed. It was a $300,000 project, but the home's value went up way more than that after completion, so we were able to refinance a new first mortgage. It was really great getting the bank involved because they helped keep the contractors honest: if there wasn't proof of work done, they didn't get paid. Made the whole process smooth for us.

We're in a different house now and about to start another $200,000 remodel (we like buying crappy houses and fixing them up, can you tell?). This time, we've got the money in cash, but I think we'll still take out some sort of loan which we can pay off when it's all done. It's nice to have that third party sort of keeping the contractors in line.

I am not sure how big you are talking. Some of the things I have done seem big to some, others not so much. Next year we are starting on the basement. We are both DIY people so we do it when we can.

Things like the kitchen I had to plan and have materials coming in at specific times because I only wanted it torn up for a couple weeks. Yes, I worked for about 16 hours a day, probably longer while I was tearing everything out.

Financing, I never start a project unless I have cash on hand to do it. Things like the basement is easy because we can do it when we have time which keeps income coming in to buy the next things we need.

I can say it is so much easier to do it yourself. You don't get all the lags that contractors can put you though.

We remodeled our home when we purchased it, before we actually moved in. We had the money saved up, so we didn't need to take out a loan. We probably spent around $125k, since we basically gutted the entire house.

The more you can save and not need to finance, the better. Obviously, this way you don't end up paying interest and making an already big expense even bigger.

We did a major renovation last year to several of the downstairs rooms. Gutted the kitchen, redid the laundry room, two bathrooms, dining room and family room.

We paid cash. With some of the materials, we put the purchases on credit card (to get rewards points) but immediately paid off the balance.

I like what Kristin said about financing it--which kept the contractors honest. In retrospect, that would have helped us as our original contractors turned the project into a nightmare. We ended up having to fire them, involve our attorney, and complete the project with all new people. If the bank had been involved, and their payments were contingent upon honest, reputable work, I doubt we would have had so many problems.

Good luck to you. Renovation's not for the faint of heart! Hope all goes smoothly.

J. F.

The most recent project ($19,000) we saved up for.

In the past I have taken out a home equity loan.

Hubby and I are planning on a big remodel (200k). My plan is to save around 35% of the costs, then use cash for some of it. We will then finance the rest of it (our current mortgage is about 9% of our current income, so we should easily be able to double our mortgage and pay for the remodel.)

I have a friend that cashed out their retirement and savings and paid for about 90% of it with cash. They then paid off the mortgage in 5 years. Crazy, because they were in their young 40s, but her hubby is a broker, so he makes tons of money a year, and she didn't want a 900k mortgage over their heads in case he lost his job. So they paid off the house, fully paid up the kids college funds, and now they are saving for retirement. I'd only cash everything out if hubby made a hell of a lot of money (250-300k a year). There are always extra expenses, so having savings is important!

So our plan is to use savings and a loan. We are saving at a very slow rate. I'm hoping to get there in 3 years! And we NEED the space! Baby number three is on the way and we are trapped in our starter ranch house!!!!!!!! And I homeschool!!!!!!!!!! But we want to make sure we do things right, so staying put and saving is important to us.