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We’re finishing our basement! We’ve lived in our home for exactly 6 years and the basement was a big selling point for us. My husband had one request when we purchased our home and it was that he could have his own space where he could work, watch sports, and play video games.
Why finish the basement?
Our house currently has 2,600 square feet of finished space. Ultimately, we’re choosing to finish about 900 square feet of space in the basement to increase our total livable square footage – We love our home and it makes sense to invest in the place that we love! We know that by making this investment in our home it will increase the value of our property and add equity if we do ever have to sell.
Financing this basement project
Estimate by square feet
When we were collecting quotes, I learned that completed basements using builder grade fixtures and finishes are currently running anywhere from $50 – $70 a square foot in the area where I live. As a reference, I’m located in a suburb of metro Atlanta so of course cost of living does determine pricing. So, my starting point for our budget was based on the idea that this basement would cost us anywhere from $45,000 – $63,000 without any upgrades or luxury finishes.
We had to think through a variety of options for this project. We are very financially conscious and have made an effort to limit our debt as much as possible. This past summer we paid off our car loans and paid the last payment on a plumbing project we had to finance in 2021 leaving us completely debt free with the exception of our mortgage payment. We have made a personal commitment to staying away from consumer debt and being very selective when taking out loans. We know that our home is a big investment so it’s one area where we’re more open to financing. So, with that in mind we decided to evaluate some of the most common options for funding a project of this scale.
Discover Home Loans is a great place to start when it comes to evaluating loan and financing options for projects of this scale. They have a variety of resources and articles available on their site to help homeowners make the best financial decisions for their families. Did you know that Discover Home Loans is the top originator of closed-end second mortgages in the United States based on total dollar amount and number of loans, according to 2021 data available at the FFIEC Home Mortgage Disclosure Act website?
After doing some online searching, talking with people we trust and seeking a professional opinion, we realized the following were the most realistic options for us to consider for a project of this scope.
- We currently have about $230,000 in equity in our home so with a Discover home equity loan we can unlock some of this equity to cover the expected and unexpected costs of the basement project.
- A cash out refinancing loan is another option to look into. This type of loan combines the current mortgage balance with the home equity loan. So, it increases the mortgage amount but the loan now includes the cashed out amount that can be used for home improvement projects.
- Using long term savings and paying cash
- Another option is to spend some long-term savings to cover the cost of the project. We do have enough cash saved to pay for the project, but we want to weigh our options before draining our savings.
After talking with our financial advisor and checking out the Monthly Payment Calculator, we decided to take the first step in applying for a home equity loan as we continue to weigh our options. The application took only a few minutes, and we were quickly provided with our interest rate, a breakdown of the potential repayment terms, and we were connected with a personal banker to assist with the process. Having a personal banker has made the application process simple and she’s available to answer any questions we have.
Some benefits of Discover Home Loans are that there are no application fees, no appraisal fees, no origination fees and no cash due at closing. They offer home equity or refinancing loans to fit your needs from home renovations to debt consolidation, with loans available between $35,000 and $300,000 and flexible repayment terms up to 30 years.
How much we’ve already spent
I know this is hard to believe, but we’ve already invested more than $16,000 into this basement and it’s still completely unfinished. There are so many horror stories about people finishing their basements and then years later having to gut it because of water issues and flooding. So instead of jumping right in to finishing the basement, we took the money we had saved and instead of framing and installing drywall, we invested in water mitigation.
- Fall 2020: Basement waterproofing $10,597.55
- Summer 2021: Exterior water mitigation: $5,935.00
How much we’re going to spend
We’ve decided to work with a contractor for the beginning stages of the basement. I know my limits as a DIYer and since this is such a big space, I want to make sure that our plumbing, electrical, and structural needs are done by licensed professionals and that all permits are properly filed. Our contractor and his team will complete all of the rough work and then I’ll come behind them and do most of the finishing work.
Here’s what we’re hiring out:
- Demolition: Opening up the stairway area and some of the partition wall.
- Framing: Framing out walls and soffits
- Electrical: New sub panel, adding outlets and switches, wiring for lighting, furnishing and installing can lights.
- Plumbing: Cutting concrete to reroute plumbing for pump, bathroom, and wet bar. Furnishing and installing a new sewage pump.
- HVAC: Installing a new HVAC system with 2 zones for main floor and basement and running ductwork.
- Drywall: Installing drywall, taping, mudding and sanding.
- Carpentry: Installing doors and baseboard.
- Bathroom: Installing shower pan, door and shower tile.
- Clean Up: Removal and haul off of construction debris.
TOTAL QUOTED COST: $44,275
This amount does not include flooring, painting, cabinets, or any fixtures. So we will need to budget additionally for those amounts. I also know that the unexpected will come up so we will also plan for an additional $5,000 in unexpected costs.
Additional rough estimates for thing’s I’ll be DIYing are:
Butcher Block Counters: $1,000
Misc DIYs/Fixtures: $2,000
So, in addition to the $16,000 we’ve already invested into the basement we can realistically expect an additional cost of at least $60,000 to completely finish the basement.
Plans for the Basement
We want our home to be a place that our family can enjoy fully and that includes the basement. Currently my husband hangs out in this space without air conditioning or heat and with only one electrical outlet. There’s no dedicated space for an office for him and although there is plumbing, there’s not a bathroom. He’s basically just living in a glorified storage unit. I want to change that and upgrade his space to one he deserves!
Here’s the first draft of our basement floorplan!
The space will feature a main living room, bedroom with closet (which will be used as my husband’s office), a full bathroom with shower, and a wet bar area.
I’ve also created a variety of inspiration boards! Check out my pins to get a full creative vision for the basement.
We hope you are as excited as we are about this basement renovation project. It’s our biggest project to date and will be the largest investment we’ve made in our home. Based on all the factors it’s probably apparent why we’re looking at all of our financial options for this project. A home equity loan from Discover does provide an opportunity to realistically plan for the expected and unexpected costs of a home project like this one.