Renovating your home without wrecking your budget

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Remodeling dos and don'ts that could help you make the most of your home — and maybe even increase its resale value.

Key points

  • Renovating your home can make it more comfortable and may increase its value
  • Don't assume that any money you spend on renovations would be recouped if you were to sell your house
  • Careful budgeting is crucial to ending up with a home that you love — and can afford
  • Review this checklist for saving for a large purchase for guidance on how to save
Homeowners are expected to spend roughly $350 billion this year on improvements and repairs.Footnote 1 As housing prices continue to rise, homeowners become more willing and able to tap their residence's equity to help protect their home's value and make their lives a bit more comfortable. Here are a few things to consider before you invest time and money on your next project.

Renovate or not?

First, check out comparable homes in your area. Would your home suffer by comparison if you put it up for sale? How many bathrooms and bedrooms do they have, on average? Do most have gourmet kitchens and finished basements? If you decide you want — or need — to keep up with the Joneses, then do a little research to see how likely it is that you'll be able to recoup the cost of your proposed renovation when you sell your home. (The chart below can help.) How much would it matter if you couldn't eventually recoup those costs?
Don't price yourself out of the market. As you think about your proposed renovations, also keep in mind that there's a risk that you'll make your home more difficult to sell by adding too much to its value.
With any renovation project, it's easy to get caught up in the fun decisions. Before you get too carried away, make sure your finances are in order.
Putting in that gourmet kitchen might make your house the most expensive on your block, which may present problems if you try to recoup the cost when you sell. And expensive renovations don't always make up for their costs. According to Remodeling magazine's 2019 Cost vs. Value Report, for instance, you are likely to recapture only 62.1% of what you spend on a major kitchen remodel.Footnote 2
Do stay open to the possibility of moving to a new home as an alternative. If, after pricing out your renovation options, you find that the cost — plus the inconvenience — outweighs the gains, you might consider looking for a house that already has the amenities you want.
Will you recoup what you spend on a renovation?
Before making costly renovations to your home, consider whether you might recoup the investment if you decide to sell. To give you an idea of what to expect, here are the average costs versus resale returns for some improvement projects according to a 2019 survey of 136 U.S. markets.
Table, showing cost, resale value and cost recouped for some popular remodeling projects.
Project Cost Resale Value Cost Recouped
Entry door replacement (steel) $1,826 $1,368 74.9%
Garage door replacement $3,611 $3,520 97.5%
Siding replacement $16,036 $12,119 75.6%
Window replacement (wood) $20,526 $14,530 70.8%
Deck addition (wood) $13,333 $10,083 75.6%
Major kitchen remodel $66,916 $41,133 62.1%
Bathroom remodel $20,420 $13,717 67.2%
Master suite addition $130,986 $77,785 59.4%
Source: © 2019 Hanley Wood, LLC. Complete data from the Remodeling 2019 Cost vs. Value Report can be downloaded free at

Decided to go ahead? Now, how will you pay for the renovation?

With any renovation project, it's easy to get caught up in the fun decisions — selecting your fixtures, appliances, colors and decor. But before you get too carried away, make sure your finances are in order.
Don't start without a budget. A ballpark figure isn't quite enough. It's important to establish exactly how much you're willing to spend. There's an all-too-common phenomenon known as "scope creep," in which you add a little of this and a little of that and, before you know it, your budget is blown. Knowing — and sticking to — your number will help you determine early on what you can afford and could prevent disappointment and financial stress later on.
Do research financing options. If you're not paying for your renovation with cash you've saved, you'll need to borrow money. A home equity line of credit link to home equity calculator may be an attractive option, allowing you to pay your expenses as they come up. If you have enough equity in your home and your current mortgage interest rate is higher than rates for a new mortgage, you might also consider a cash-out refinance. If you don't want to borrow against your home, look into traditional bank loans or credit card promotions, including limited-time, 0% APR financing or reward programs that offer cash back.
You can sometimes save money by tackling a renovation project yourself, but know your limits. A project that has to be done twice is the most expensive project of all.

How's your money best spent?

What's a better use of home improvement dollars — updating a serviceable but somewhat tired kitchen or replacing a houseful of old, drafty windows? When you eventually sell, potential buyers may love a new kitchen, but they're likely to balk at glaring structural issues.
Learn more about the ins and outs of home ownership. Read more on the Home Life Priority page.
Don't underestimate the value of quality structural upgrades. Investing in redoing your siding may not be as sexy as adding a master bedroom suite, but it can be pretty attractive when it comes time to sell. According to Remodeling magazine's 2019 Cost vs. Value Report, new siding can recoup 75.6% of the initial cost (on average).Footnote 2 Not only does it give your house a visible facelift, but it also makes for a warmer, more energy-efficient home.
Do look for smaller projects that add immediate value. Consider replacing your front door with a high-quality door. First impressions matter, and the door is the first thing friends and neighbors — and potential buyers — notice when they walk into your house. Rather spend your renovation budget elsewhere? Add a fresh coat of paint to the door and buy a new welcome mat.
Do think about what you may need in the future. Are you planning to stay in your home as you age? If so, then you might not want your proposed renovation to include additional stairs or a doorway or hall that might not be easily navigable with a wheelchair or walker. Think instead about things like a shower with seating and an anti-slip coating, or kitchen cabinets with pull-up and pull-down shelves.

Do it yourself or hire a pro?

You can sometimes save money by tackling a renovation project — or part of it, such as spackling and painting — yourself. With thousands of how-to videos online, it's easier than ever to become a do-it-yourself expert, but know your limits. A project that has to be done twice is the most expensive project of all. And bear in mind that, apart from doing the work, a good contractor will know how to navigate building codes and work to get whatever approvals you may need.
Don't take on a project beyond your abilities. To save money, it might seem like a good idea to tackle costly tasks yourself. But some jobs, such as rewiring an outlet or retiling a bathroom, are best left to the pros. Taking on a project for which you're not qualified could be dangerous as well as ultimately more expensive (when you have to hire a contractor or handyman to fix your work).
Do your homework before hiring a professional. Recommendations from friends and relatives may be useful, but don't stop there when you're hiring an electrician, plumber or contractor. Nationally known websites offer local customer reviews that can be valuable resources. And before you hire anyone, always get a face-to-face consultation and cost estimate.

Tips for hiring a contractor

  • Request documentation. Your contractor should be licensed and insured, and it's perfectly reasonable to ask to see proof.
  • Ask for references. Recent clients can give insights on the working relationship, while those whose renovations were completed years ago can let you know if the workmanship has held up over time.
  • Schedule a face-to-face meeting. A good contractor will listen to your ideas, but also make recommendations. Ask for a detailed project scope and estimate. Both parties should sign a contract before moving forward.
  • Don't discount the likeability factor. You will be working closely with this person — do you like him or her? Are you treated like a valued customer? Are your phone calls and emails promptly returned?
  • Pay in installments. A trustworthy contractor will typically ask for partial payment up front and the remainder when the job is completed.
Remodeling your home is a big project even if someone else is doing all the work. But creating the home you really want can be deeply satisfying — especially if you do it at a cost that makes you feel as comfortable as your house does.
Next steps

Footnote 1 Joint Center for Housing Studies of Harvard University, "Expected Gains in Remodeling Spending to Slide Lower in 2019," January 17, 2019.

Footnote 2 2019 Hanley Wood, LLC., "Remodeling Magazine's 2019 Cost vs. Value Report," 2019.

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