Start with real bids
Online cost guides are a fine starting point, but your number should come from contractors who have seen your home. Get two or three written bids for the same scope of work. Compare what each one includes, such as demolition, materials, cleanup and permits. A low bid that leaves things out can cost more in the end.
Build your number
Add up everything the project will need, not just the contractor's price.
- The contractor bid you plan to accept
- Permits, design or architect fees, and any engineering
- Materials or finishes you're buying yourself, like appliances or fixtures
- A cushion of 10% to 20% for surprises
- Temporary living costs, if you'll need to move out during the work
A sample budget
Here is a hypothetical example. Your numbers will differ.
- Contractor bid: $60,000
- Permits and design: $4,000
- Subtotal: $64,000
- Cushion at 15% of the subtotal: $9,600
- Total to borrow: about $73,600
Why the cushion matters
Remodels often uncover problems you can't see until walls or floors are open, like old wiring, water damage or rot. Material prices and lead times can also change. Older homes and larger projects tend to need the higher end of the range. If you don't use the cushion, you can put it toward the loan.
Check how much you can borrow
Your equity sets the ceiling. Lenders look at combined loan-to-value, which adds your current mortgage and the new loan and compares the total to your home's value. For example, a $300,000 combined balance on a $400,000 home leaves $100,000 of equity untouched.
The maximum depends on the loan type and purpose, and a loan consultant can tell you yours. Your actual amount also depends on your credit, your income and the home's value. CapCenter home equity loans are available on single-family primary residences and second homes.
Choose how to borrow
- Home equity loan: one fixed-rate lump sum, and you keep your first mortgage and its rate. A good fit if your current rate is lower than today's.
- Cash-out refinance: replaces your mortgage with a larger one. Worth comparing if today's rates are at or below your current rate.
- Savings or other options: for projects under $50,000, savings or another loan type may fit better than a home equity loan.
Match the loan to the project
CapCenter home equity loans run from $50,000 to $250,000, with a fixed rate for 15, 20 or 30 years and ZERO Closing Costs (restrictions apply). Choose a term with a payment that fits your budget comfortably, and keep the borrowing to the project itself.
