If you own a home, chances are you’ll consider home improvement projects at some point. All homes need some type of repair or remodel sooner or later, and improving your home can increase both its value and your enjoyment. Home projects can be costly, however, and budgeting for home improvement costs and financing can save you heartache later on. Here are some tips to help you balance your home improvement financing and budget.

Know Which Home Improvement Projects You Can Afford

The first step in planning a home project is getting a real feel for what you can afford. Here are some steps to follow:

• First, add up your income from all sources, including employment, alimony and other settlements.
• Next, calculate all your regular outgoing expenses including food, entertainment, insurance, medical/dental, mortgage and utilities.
• Then, subtract the total of your regular expenses from your income to see how much you regularly save each month.
• Finally, decide realistically how much you can afford to spend on your project each month, while still putting away enough for emergencies.

During this planning stage, you may also want to check out your credit score and do what you can to improve it. The better your credit score, the more options you’ll have for financing. You may really benefit from waiting until you have your best credit score before starting your project.

Increasing Your Home Improvement Budget

If your budget seems tight, you may want to look into lowering your regular monthly expenses to give you a little more to spend each month on home improvement. Here are a few ways to lower your monthly bills:

• Compare auto insurance rates to see if you can get the same coverage for less.
• Consider buying store brands instead of name brands, when quality isn’t sacrificed.
• Cut entertainment costs by creating festive dining-in experiences with your family.
• Lower your thermostat to cut heating costs.
• Turn off appliances and lights when not in use to cut electric costs.

Estimate the Cost of Your Home Improvement Projects

Next, you’ll need to see what the project you plan will cost. Most contractors give free estimates, and home experts recommend you get at least three of these to get a realistic picture of cost. You can also find home improvement estimator programs online, to help give you an early ballpark idea about the cost of your project.

Additionally, you’ll need to plan for cost-management, to avoid going over budget once your project begins. Be sure to discuss “worst case scenarios” with your contractor and get everything in writing before work begins.

Choosing Your Best Home Improvement Financing

Once you know what your project will cost, and what you can afford to spend each month on it, you can begin to look for financing. Some excellent options include:

• Cash-out refinance
• Credit cards
• Home equity line of credit (HELOC)
• Home equity loans
• Title 1 Loans.

You can also borrow against your own assets with:

• 401 (k) loans
• Life insurance loans
• Margin loans.