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Are your mid-80s beige cabinets with wood trim ready for an update? Maybe your countertops show signs of wear and tear from previous owners. Or perhaps your kitchen feels a bit cramped when the whole family gets together for a dinner party. It could be time for a kitchen remodel, but is an affordable one really possible?
Kitchen remodels can be pricey. But consider the possibilities: even modest kitchen upgrades, made within your budget, can be a wise financial move that adds functionality and value to your home.
The Average Cost to Remodel a Kitchen
A major kitchen remodel typically costs between $100,000 and $110,000, and an upscale remodel can cost $200,000. Costs fluctuate by region, and factors like luxury countertops, high-end flooring and commercial-grade appliances can significantly drive up renovation expenses.
Paying for a Kitchen Renovation
Before starting any new projects, you’ll want to determine your budget. Here are some options to consider:
Spread out renovation work over time. Budget yourself to invest in small renovation projects you can do incrementally, such as on a monthly basis.
Find significant cash flow. Sure, you might come into an inheritance or other windfall. But if that’s unlikely, consider a cash-out refinance or a home equity loan, to draw on your home’s existing equity in exchange for a large lump sum of cash.*
A home equity loan is a type of second mortgage that allows you to borrow against the equity you’ve built up in your home, providing a lump sum of money at a fixed interest rate. It offers predictable repayment terms and stable monthly payments, making financial planning more manageable. Plus, since it’s a separate loan with its own term and interest rate, it doesn't affect the interest rate of your existing mortgage.
A cash-out refinance allows you to replace your existing home loan with a new one that has a higher principal balance so you can receive the difference in cash at closing. This option is particularly advantageous in market environments that offer lower rates than the rate you currently have on your loan. In this type of optimal scenario, you could potentially lower your primary mortgage rate while also obtaining cash to use for renovations.
Create a savings plan. Determine how much you’ll need, then save money in a high-yield savings account over time. After you’ve hit your savings goal, kick off your kitchen remodeling.
Home improvements, like a kitchen remodel, can increase your property's value, which can build additional equity in your home. Financially responsible options like cash-out refinancing and home equity loans, along with saving money, are effective ways to fund these enhancements.
How to Remodel Your Kitchen
Remodeling your kitchen is a significant undertaking that could impact your home’s resale value and improve your quality of life. With the right planning and strategic decision-making, you can achieve a beautiful and functional space without breaking the bank. Here’s how to get started:
Define Your Goals
The first step is to identify precisely what you want to achieve. Do you want to update the look? Improve the layout? Enhance functionality? Establishing clear goals will guide your design choices and help you prioritize various aspects of your project. Consider how you use your kitchen and what changes will have the greatest impact on your lifestyle.
Plan Your Budget
Determine how much you can realistically afford to spend on your kitchen remodel and stick to it. Break down your budget to cover typical elements, including:
- Cabinetry
- Flooring
- Countertop
- Fixtures
- Painting
- Lighting
- Backsplash
- Plumbing
- Electric
- Storage
- Appliances
- Ventilation
- Labor
Think about whether you’ll be restructuring your kitchen layout. Also, consider your must-haves vs. your nice-to-haves and how they fit into your budget.
Always include a contingency fund of at least 10-20% for unexpected expenses. Shop around for the best deals and consider alternative materials that offer a similar look for a lower cost.
Project Management
Managing a kitchen remodel requires careful planning and coordination. It involves lots of moving parts and tasks need to be completed in certain sequences since one project impacts another. Not to mention, being temporarily without a working kitchen can disrupt daily life, so you want to minimize inconvenience as much as possible.
Talk to your onsite project manager and the other professionals involved to create a timeline. Keep track of all expenses and stay on top of communication with your remodeling team. If they have questions or run into issues, try to address any concerns promptly to help keep the project moving forward.
Renovating on a Tight Budget: Money-Saving Tips
Typically, the most expensive aspects of any kitchen remodel are the cabinetry, appliances and countertops. You still have choices that can help reduce costs:
Pick Mid-range Cabinets
When it comes to cabinets, the quality significantly affects both cost and longevity. While builder-grade kitchen cabinets can cost less, they may have a shorter lifespan. But going completely custom—which is expensive—is often not necessary. Investing in a high-quality stock line or semi-custom line of cabinets can provide a variety of features at a reasonable price.
Seek Sale Appliances
Look for discounts on dishwashers, refrigerators and ranges and buy them on sale. Many appliance retailers will hold the items until you’re ready for delivery or will place appliances in your garage to await installation.
When purchasing appliances, go with a local retailer rather than buying online. Local retailers have more control over their prices, so often they may offer discounts. Plus, if an appliance under warranty stops working in the future, it's easy to contact your local store, which can send a representative. With online purchases, appliance returns or repairs can be an expensive headache.
Choose Cost-Conscious Materials
Choosing cost-conscious materials is a strategic way to manage kitchen remodeling expenses. Material prices can significantly vary based on their type and quality. For example, flooring options like sheet vinyl and laminate are typically more affordable than marble, slate or hardwood. Countertop materials range from budget-friendly laminate to higher-cost granite, quartz and Corian.
Carefully consider each material's cost alongside its benefits, upkeep requirements and lifespan. This will help you make informed decisions and select materials that balance aesthetics, functionality and your budget.
Do It Yourself Where It Makes Sense
If you’re handy, you may be able to do some renovation tasks yourself, which can reduce labor costs. If you’re a real DIY enthusiast, plan a renovation staycation. Depending on your skill level, you can spend your reno-retreat doing the following:
- Adding new cabinet hardware
- Installing flooring
- Painting walls
- Replacing appliances
- Updating light fixtures
- Installing shelving
- Replacing or updating faucet fixtures
- Updating light panel switches
- Adding highlighting to the interior cabinets or under-cabinet spaces
Understand Where You Can DIY vs. When You Need to Hire a Professional
While DIY can save money, some tasks require professional expertise. While you may be able to manage painting walls and changing hardware, tasks involving plumbing, electrical work or structural changes typically need licensed professionals. Evaluate your skills realistically and consult with experts when necessary to avoid costly mistakes or safety issues.
Bring Your Kitchen Remodel Vision to Life With a Home Equity Loan
A home equity loan allows you to leverage the value of your home equity to access funds for large projects like a kitchen remodel. You’ll receive a lump sum of immediate funds while keeping your first mortgage. Plus, it features a fixed-rate monthly payment, which makes budgeting easier. To explore how you can turn your home equity into cash in hand, speak with a Pennymac Loan Expert today.
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Meet Our Contributing Editors
Bradley Thompson and Afton Lambert are Contributing Editors for Pennymac’s consumer content and are exemplary leaders within the mortgage industry space. Both experts take pride in helping our customers achieve and sustain their aspirations of home.
For over 13 years, Bradley has achieved success as a high performer in various leadership roles including consumer direct sales and mortgage fulfillment positions.
With over 10 years of mortgage experience, Afton started her career as a top performing Loan Officer, before transitioning into her leadership role, where she has recruited, hired and trained Loan Officers.
