Dec 26, 2023

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When you are ready to tackle home improvements, a key decision often involves the simple question of remodel vs. renovation.

The two may sound similar, but are they the same? Both remodeling and renovating are projects meant to improve the look and feel of your home. But whether you choose one or the other can ultimately determine how much it costs.

Knowing the difference may help you define your next steps. And this information could be helpful as you plan a realistic budget and choose a way to pay for it.

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What is the difference between a renovation and a remodel?

Renovations often involve refreshing the appearance of a room or helping restore it to proper working order. For example, you might move into an older home whose kitchen has seen better days. Repainting the cabinet doors, installing new countertops or faucets, retiling the backsplash, and getting a new refrigerator would be part of a kitchen renovation.

Remodeling is usually more extensive. “With remodeling, you’re getting into moving utilities around and changing the infrastructure of a home,” explained Brian Worgess, a general contractor and co-owner of a building company in Amherst, Massachusetts. “So, remodeling is going to cost more than renovating.”

Remodeling can include new room layouts, relocating appliances, plumbing, or electrical, or even changing your home’s square footage. Examples of large remodeling projects might include creating an open concept floor plan, building an addition, or combining two rooms into one.

Remodeling projects sometimes lead to unexpected costs. For example, you might discover that the changes you want require you to bring your home up to code.

“Electrical and plumbing codes are constantly changing,” Worgess said. “It’s pretty common to find that, once you get into the walls, you see your existing electrical and plumbing isn’t up to code. Building inspectors won’t sign off on the final work, so you have to update it. Those kinds of surprises are another thing that drives up the cost of a remodel.”

Whether you’re thinking about a renovation or a remodel, you may want to start by setting up a budget, followed by planning on how you’ll pay for it. You may then want to create a step-by-step checklist for how the work will get done. Some additional funds should then be budgeted for unexpected costs.

How much does a renovation cost?

Even though renovations are more limited in scope than remodels, they can still be costly. Many factors determine the price range. These include how much of the work you do yourself, the materials you pick for new cabinets or surfaces, the price of new fixtures, the cost of paint or other new finishes, and many other details. For instance, kitchen cabinets from a big-box store can cost a fraction of the price of custom-made cabinets.

The cost of renovations can vary widely depending on how you decide to move forward. Some renovations could be relatively inexpensive if they involve simple repainting and replacing a few plumbing or electrical fixtures.

More extensive room renovations may be much more costly if you plan to replace all bathroom fixtures, kitchen appliances, or outfit a new bedroom in a basement or attic.

And remember, costs vary by location. Big urban areas often have higher labor and materials costs than other places, and that affects the total project cost.1

“With remodeling, you’re getting into moving utilities around and changing the infrastructure of a home, so remodeling is going to cost more than renovating.”


Brian Worgess, a general contractor and co-owner of a building company
Amherst, Massachusetts

How much does a remodel cost?

Remodels are typically more extensive than renovations. As a result, the costs for these types of projects might be higher than for renovations. Like any home improvement, the final price depends on many factors. These might include the size of the space to be remodeled, materials used, labor costs, building permits, new appliances, and the age and condition of the space to be improved.

If you have big changes to make, you might want to engage a contractor early to help you set a budget. Many of the costs could be hard to estimate without an expert. Planning your schedule may also be a challenge as the project might take an extended period of time.

A full bathroom remodel, for example, might involve new plumbing and electrical lines, including opening walls or floors. A kitchen remodel might call for changing the layout of appliances and cabinets. Remodeling a master bedroom and bath can also be among the most extensive types of improvements you can make. In general, these projects can easily run from several thousand dollars to more than $100,000.

Remodel vs. renovation: How do you decide which is right for you?

Choosing between a remodel or renovation could be a big decision. It may come down to what fits your budget and what you can afford. Or the decision may be driven by the current state of your home, including whether you need to bring it up to code. You may also need to think about how much each type of project might disrupt your life, and how you will manage a home improvement project.

Finally, it’s important to know what your goal is. Do you plan to sell soon, and are you looking to make your property more attractive? In that case, renovating a few important areas might be enough. But if you plan to settle in for the long haul, a larger remodel might make more sense.

Whether you decide on a renovation or remodel, keep in mind how it might affect your home’s resale value. Some projects might have a higher return on your investment. Those could include garage door replacements, exterior home improvements like manufactured stone veneers, and minor kitchen remodels.2

How can you save money on remodeling and renovations?

One of the easiest ways to save money on your remodel or renovation is to reduce the size of the project. Instead of fully remodeling a bathroom, you might settle for replacing the vanity and toilet and adding a fresh coat of paint. Or instead of building an addition to your home, you might repurpose an existing room to give you more space.

If you have the skills (or have relatives or friends who do), you might be able to do some of the project yourself, which can save you on labor costs. Just remember that some home repair projects might require that work be done by a licensed professional. Find out the rules in your area before starting the work.

“It depends on the skill set of the individual and how comfortable they are doing the work,” Worgess said. “Some ways to save money are doing the painting themselves or doing the trim around the windows. Those things that don’t require a license would be good to DIY.”

Finally, focus on the materials. Rather than replacing everything, think hard about what you can keep and reuse. And opt for budget-friendly materials like manufactured countertops instead of natural stone.

How can you pay for remodeling and renovations?

There are several ways to pay for home improvement projects:

  • Out-of-pocket: If you have ample savings, you might be able to pay for small projects without any financing. Larger projects, though, might require financing.
  • Credit card: Credit cards might be a convenient way to pay for materials and supplies at home improvement stores. Bear in mind, though, that credit cards may carry high interest rates, and if you don’t pay the balance in full each month, you could end up paying much more than the amount you originally borrowed.
  • Home equity loans or a home equity line of credit (HELOC): You could borrow against the equity in your home to pay for remodeling or renovations. These can be structured as a single loan that provides funding or a line of credit that you can use repeatedly. For example, a home equity loan uses your home as collateral, and most lenders will allow you to borrow up to 90% of your home’s value (minus what you owe on your mortgage). But not everyone wants to use their home as collateral.
  • Personal loans for home improvement: Whether you are planning a remodel, renovation, or have a sudden, unexpected home expense, a personal loan may be funded quickly and easily. Unlike a home equity loan, a personal loan is unsecured, meaning it doesn’t require collateral. And because it’s structured as an installment loan, it is very predictable with a fixed interest rate and one set regular monthly payment. That may make it easier to work into your budget. For example, with Discover® Personal Loans, you can estimate your monthly payments ahead of time and apply for up to $40,000.

The bottom line

A remodel or renovation can help convert a house into a home. Even though they require time and money, these projects can be worth it in the long run. By knowing which type of project is right for you and how the right financing could help, your dream home may well be within your sights.

Want to explore the pros and cons of a personal loan for home improvement?

Read More

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