5 Money Moves You’ll Regret When Renovating Your Home

Renovating a home is not for the faint of heart. You have to deal with an incredible amount of pressure to get things right while also having people work in your living space. But on top of all that, there are also financial factors to consider.

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“I often see homeowners take on too much debt or choose cheap options when renovating that end up costing more in the long run,” said Garrett Ham, real estate investor, property manager and CEO of Weekender Management .

Below are some money moves experts said you’ll regret when you renovate your home .

Taking on Excessive Debt

One common mistake homeowners make when renovating their homes is taking on excessive debt, particularly through high-interest loans or credit cards.

“While it might be tempting to finance renovations quickly, the interest payments can add up, leading to financial strain,” said Dennis Shirshikov, head of growth at GoSummer and finance professor at the City University of New York.

“For instance, a homeowner might use a credit card with a 20% interest rate to fund a kitchen remodel, only to find themselves struggling to pay off the balance years later.”

He said a more prudent approach would be to save for renovations or consider a home equity loan with a lower interest rate.

Ham agreed, noting that one of the biggest mistakes is using credit cards to finance renovations.

“The high interest rates mean much of your payment goes toward interest, not principal. It can take years to pay off and end up costing thousands more.”

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Overestimating Budget and Underestimating Costs

According to Shirshikov, homeowners often regret not creating a realistic budget and failing to account for unexpected expenses.

“It’s easy to get caught up in the excitement of renovations and overlook additional costs such as permits, unforeseen structural issues or design changes.

“An anecdote to illustrate this: A family planned a $30,000 renovation but ended up spending over $45,000 due to unforeseen plumbing issues.”

A detailed budget with a contingency fund for unexpected costs can help mitigate this risk.

Choosing the Cheapest Option Without Considering Quality

Opting for the cheapest materials and contractors can lead to regretful outcomes, as these choices often result in poor quality and higher long-term costs.

“For example, selecting the least expensive flooring might save money initially but could require replacement sooner due to wear and tear,” Shirshikov said.

Investing in quality materials and reputable contractors might have a higher upfront cost but can save money and frustration in the long run.

“Homeowners should seek a balance between cost and quality to ensure their renovations are durable and add value to their property.”

Ham similarly agreed that a major regret is choosing the cheapest contractors or materials to save money upfront.

“Cheaper options tend to require more maintenance and repairs down the road. It’s usually worth spending a bit more for high-quality, durable materials and experienced contractors.”

Not Exploring Financing Options Thoroughly

Failing to explore and compare different financing options can also lead to regret.

Homeowners might impulsively choose the first available loan without considering alternatives that could offer better terms.

“For instance, a homeowner might take out a personal loan with higher interest rates instead of a home equity line of credit (HELOC) that offers lower rates and tax benefits,” Shirshikov said.

He recommended consulting with a financial advisor to understand the best financing options based on your situation.

“[This] can help homeowners make more informed decisions.”

Ignoring Return on Investment (ROI)

Many homeowners regret not considering the return on investment (ROI) of their renovations.

“Certain projects, while appealing, may not add significant value to the home,” Shirshikov explained.

For example, a high-end bathroom remodel in a mid-range neighborhood might not yield a good ROI compared to a kitchen upgrade or adding energy-efficient windows.

“Homeowners should research and prioritize renovations that offer the best return, aligning their projects with market trends and the overall value of their home.”

Ham equally noted that a big regret is not planning renovations with resale or rental potential in mind.

“Upgrades that match the neighborhood style and target key areas like kitchens and bathrooms tend to yield the highest returns.

“Renovating in a way that limits the home’s appeal to future buyers or renters will cost you in the long run.”

This article originally appeared on GOBankingRates.com : 5 Money Moves You’ll Regret When Renovating Your Home