The average home renovation cost for 2020 was $46,778, with some homeowners spending as much as $150,000 for high-end multiple-room improvements. 

While renovating a house is a great way to add value to your investment and improve the overall look and feel of the place that you call home, you don’t have to spend your entire life savings just to redo your space.

As millennials become one of the largest groups of homeowners in the country, more and more are looking to find ways to spruce up their home without busting their budget. Likewise, some are turning towards flipping houses as a way to grow their long-term wealth. In fact, flipping homes has hit an all-time high this year. 

It’s a decent way to make some extra cash to invest with, that’s for sure. However, there are also ways that you can save on home renovations (whether it’s for your own home or a home you’re flipping). Follow along to learn how to save when renovating a home in order to maximize your current and future investment.

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Consider Financing First in Home Renovations

Okay, if you’ve already Googled “How much does it cost to remodel an entire house?” and you’re currently having a panic attack over the number that’s popped up, then we’re going to ask you to take a deep breath and just listen. 

While those numbers are general ballpark figures given to people who decide to go all in without looking at their financial options, you don’t have to spend that much on a renovation. Before going crazy with your Pinterest dream renovation boards, you’ll want to ensure that you have considered your options for financing a home renovation. 

So, what are your options? 

Personal Loans

The quickest way to access cash for a home renovation would be to take out a personal loan. If you go that route, you’ll want to ensure that you’ve got your credit score in check. With a higher credit score you’ll be able to access better interest rates, which can greatly reduce the final amount of the loan by the time you’re done paying it off.

It's important to note that, when searching for personal loans, it's helpful to search around for the best rate. Using a loan calculator can help, and taking a look at a loan table will help give you a good idea of what you're able to get based on your credit score, location, and loan type. Take a look at our helpful loan calculator tool here.

HELOCs

HELOC stands for Home Equity Line of Credit. If you already own your home (i.e. you’re not purchasing a home just to flip), then you might be eligible for a HELOC. These loans are secured loans that are backed not by the bank but by your property itself. This means that you’re often able to qualify for lower interest rates than for a regular personal loan.

Home Equity Loan

Similar to a HELOC, a home equity loan (also called a second mortgage) is a loan taken out using the value of your property as collateral. The benefits of a home equity loan versus a HELOC include the fact that you get to lock in the loan at a fixed interest rate and pay back the same amount each month. And, you get all of the cash up front to use however you’d like.

Credit Cards

Sure, you could charge all of your home repairs to your credit card, but we’d recommend against doing this. If your home renovation is under a few thousands dollars then this might be feasible. For example, if your card has a 0% APR and you’re earning cashback on every purchase then it could be a great idea.

Always keep in mind, though, that your credit score is the foundation of your financial health and future. If you use a credit card to finance a home renovation, make sure to always make payments on time and to try and keep your credit utilization rate under 30%.

What Are the Steps to Remodeling a House?

From refinancing your mortgage to taking out a home equity loan, there are many options that don’t include spending your children’s college funds. 

First, ensure that a renovation will add value to your home. If it won’t, then it’s probably not the best financial decision at the time. Then, calculate how much the renovation will cost and add an extra amount for any unforeseen costs and building fees. 

Once you’ve reached this step in the home renovation process, you’ll be ready to begin purchasing your materials. Do not skip this step. Not budgeting and planning beforehand can lead to unforeseen costs that, by the time you reach the point in the renovation, will be totally unavoidable.

Find Creative Ways to Save on Materials

The easiest way to save money on home repairs and renovations? Get creative! If you love the look of hardwood floors, for example, you can get the same look at a much cheaper price by opting for faux-wood flooring. As an added benefit, faux-wood is actually easier to clean and more eco-friendly in some instances. 

For a truly unique and creative renovation, you can look for scraps of flooring such as marble to hack an impressive new look at a low cost. You can also save on materials at a place like Home Depot, for example, by purchasing some of their “Oops Paint,” which is paint that others have opened and found that didn’t quite fit with their color scheme and later returned to the store. 

Easy hacks like these will yield the same result at a much cheaper price.

Optimize the Functionality of Your Home to Reduce Long-Term Costs

A home renovation is a great time to incorporate smart technology and other features that can help you optimize the functionality of your home while adding value and decreasing additional long-term costs such as electricity and power usage. 

If you’re creative about how you spend, you can reduce the overall costs of a home renovation by installing things such as smart thermostats and other energy-saving technologies that will drastically cut your home costs in the future while also making your home a greener space to live in.

Not convinced that smart home technology can reduce your expenses long-term? One 2019 study showed that installing smart home energy management systems reduced energy costs up to 22% in certain cases. Likewise, smart thermostats can save homeowners an average between 9 and 16% of energy when heating, and 15 and 23% when cooling.

Get Cashback on Your Home Renovation Purchases

The easiest way to save on a home renovation is to purchase an item at the lowest price. While you might not always be sure you’re getting the best price for something you buy, there are apps that can help with that.

Install Chrome extensions such as CamelCamelCamel to track Amazon prices. You’ll get notified when the price drops so that you can ensure you’re getting the best deal. Other price matching apps include ShopSavvy and RedLaser. Likewise, most home renovation stores such as Home Depot and Lowe’s have their own price matching policies that are worth checking out.

This is not only a great way to save on your home renovation purchases, but it’s a good way to save year-round in order to put money back into the remodel.

Invest in Your Home & Yourself

Learning how to save on home renovations is a great way to invest in your home and yourself. But, don’t stop there. Keep investing in yourself!

What will you do once you’ve completed the renovations, flip the house and are ready to sell? What are you going to do with all of that extra cash? How about those savings? Let’s say you renovate your home to increase its value and decrease your yearly utility fees. How will you invest that extra money?

Learning to invest in stocks is a great way to invest in yourself and your future. Learning how to invest wisely, however, can make all the difference.

Ready to get started? Download the Wealth Stack app for free today to start learning how to invest as a beginner. We have free, fun video courses that will teach you how to build a solid financial foundation in the pursuit of long-term wealth.