Siding is an integral component of your home. It can drastically change the appearance with texture and color while protecting your home from the elements and making your home more energy efficient. While moving forward on the project and selecting a contractor is exciting, it’s important to find time to look at the numbers and complete the budgeting process for your siding project.
Creating a budget for a home improvement project like siding installation can seem intimidating, but you’re in the right place to find guidance on how to best manage and create a budget for your investment in your home.
Budget for Siding
There are so many siding varieties in today’s market to match every homeowner’s vision and budget. Depending on the material, siding can range in price from $4-$15 per square foot. Things to consider with your contractor will include the climate in your area, the look you’re trying to create, and the numbers you’re working with. Do your research, but also leverage your contractor’s expertise for which material will be the most cost effective for your home.
At Modernize, we frequently speak to homeowners about their home improvement projects. Budgeting your project is stressful and we get that: The first step is to be sure you can afford the siding you’re planning to install, based on factors like your cash flow, your assets, and what the return will be on your investment.
That’s where the budget comes in. Put simply, your budget is comprised of some simple math. After consulting with your contractor, here’s what you need to figure out.
How much can you afford?
Calculate your income and your expenses, your needs and your wants, and find the figure of money you could theoretically put aside for this investment in your home. Your experienced contractor is one of your most important initial sources on how to best determine what that investment should look like from outside your personal goals— be sure to consult them, but remember this is your project (and your money).
What Is Your Home Equity?
If and when you decide to finance your own siding installation, your home equity could play a pivotal role in everything from your loan amount to your interest rate. Simply put, your equity is the difference between what you owe on your home or property and the appraised (or market) value determined for it.
The more of your mortgage you’ve already paid, for example, the higher your equity in the given property. And the more equity you hold in your home, the more powerful you are as a borrower, especially when it comes to purchasing power, or the financial ability to buy (or purchase) things.
What Is Your Credit Rating?
From your credit score to your existing savings, purchasing power, and other ongoing loans, various financial institutions will have slightly different scales by which to determine your eligibility for a home improvement loan. And while some programs are certainly designed to be on your side—like the HomeStyle Energy Program or the Title I Property Improvement Loan—you’re going to be paying back in some way.
One of the most significant markers of your financial health—as determined by financial institutions, anyway—is your credit score. Plainly put, a credit score is “predicts how likely you are to pay back a loan on time,” according to the Consumer Financial Protection Bureau. Companies us proprietary scoring models to calculate your credit score using information from your credit reports, which essentially break down your “credit activity and current credit situation, such as loan paying history and the status of your credit accounts.”
Knowing your credit rating and how you’ll be considered as a borrower will go a long way in helping you determine how much you can afford as you budget for new siding.
Be Real About Your Siding Needs
Homeowners have shared through surveys that trying to decipher the complex elements of their siding project left them seeking more professional support—which our homeowners found with Modernize.
You likely already have a solid idea of what this project will entail based on what your contractor has shared with you. And while their goals might be completely in your favor and aim to maximize the amount of protection from the elements and insulation the siding brings in, they might not necessarily align with your personal or aesthetic goals. Be sure to communicate your own priorities with your contractor.
It all comes down to trusting a contractor—and that also means a contractor trusting you. The more upfront you are about what you want to do and your financial limits, the better a contractor will be able to hone in on the best type of budget to build for your siding installation. It might not result in the gingerbread house of your dreams siding job you dreamed of, but it will result in the best value you’ll get for the money you’re able to invest.