Homeowners Gary and Jackie Weber got creative with their financing to build an addition onto their 1950s story-and-a-half house in Minnesota.

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Gary and Jackie Weber bought their 1950s story-and-a-half home in St. Anthony, Minnesota, in 2004. They didn’t have many plans for the house, but they did know remodeling might be a possibility down the road. It would be six years, however, before the couple seriously started talking about an addition. And then another six years before they broke ground on the project.

“I’ve always wanted to do something like this,” says Gary, “not just to make more space for a family, but to also take this old building and make it our own and make it beautiful.” He and Jackie briefly window-shopped for new, larger homes to make sure they were considering all of their options. But the reasons they fell in love with the house in the first place—the character, quality of the construction, neighborhood and proximity to both Minneapolis and St. Paul—solidified their decision to remodel.

In 2014, the Webers hired a company to start sketching a design that would allow room to accommodate a growing family while maintaining a more traditional aesthetic to fit with the neighborhood’s architecture. The main goal? Maximize the upstairs space by designing a bump-out to hold the master suite, complete with a new bathroom.

Financing for a home renovation loan

Construction officially began in 2016, but financially planning for the project started long before with “a lot of strategic choices in the 10 years leading up to the remodel,” Gary says. Selling their previous house for a profit made it possible for the Webers to offer a strong down payment on their St. Anthony home. And a refinance in 2011 to a 15-year mortgage allowed them to make a large dent in the principal amount owed. After learning the estimated costs of the addition, they refinanced again in 2016, securing a renovation loan through a 30-year, fixed-rate mortgage.

Refinancing via a renovation loan lets borrowers roll remodeling costs into a new mortgage. These loans take into account the value of a home after a renovation so homeowners are able to borrow more than they could with a traditional home equity loan. Plus, refinancing loans often come with a caveat – you must borrow an additional amount equivalent to 20 percent of the project cost for unexpected expenses. This stipulation came in handy when the Webers’ renovations didn’t exactly go according to plan.

Unexpected home remodel costs

The porch was not structurally sound enough to hold the additional weight of a bump-out on the back of the house. So the contractor suggested tearing off the entire half story and rebuilding it with custom trusses. Trusses are an assembly of beams used to create a rigid structure. The siding also had to be completely redone once some damaged stucco was discovered. This created an opportune time to replace all windows and doors, plus add more insulation to the house’s exterior walls while everything was exposed.

On top of these construction setbacks, Jackie was in her first trimester of her second pregnancy. And she ended up needing emergency abdominal surgery at nine weeks. “So it was not just house-related, but a whole life surprise. An unexpected expense that was in the middle of a house renovation project,” Jackie says. “Mentally, it helped to know there was an end in sight. We also had a lot of support from friends and family, and that was key.”

How did it all turn out?

Being financially prepared was equally important. The Webers entered the project with a buffer, thanks, in part, to the 20 percent borrowing surplus required with their renovation loan. When that was used up, they cashed in a savings bond and tapped a Roth IRA to finish the remodel. They also eliminated unnecessary design features, such as a mudroom, to make up for some of the expenses.

While the addition ended up costing about 50 percent more than anticipated, “the nice thing about a lot of these unexpected expenses is that they really contributed to a much better end product,” Gary explains.

Beyond budgeting for a cost overrun – which Gary notes is not a matter of “if,” but “when” and “what” – the couple has a few bits of advice. They encourage other homeowners contemplating a remodel to get quotes from no less than three contractors. And don’t just go with the cheapest one.

“We went with someone we had the best connection with,” Jackie says. “These people are going to be in your home every single day for months. You have to be able to have a good rapport with them.”

Depending on the scale of the renovation and your budget, she also suggests considering alternative living arrangements during construction. This was something the Webers didn’t do and found challenging, especially with a three-year-old at home and another baby on the way.

In March 2017, two months before their second son arrived, the Webers were settled into their reimagined home. Despite the setbacks and unexpected costs, they agree it was all worth it in the end.

“We made the investment because we wanted to stay here. It’s a great school district, we love the neighborhood and the property that we’re on has a nice-sized lawn,” Jackie says. “We’re going to be here a while.”

Are you thinking of updating or remodeling your home? Ask these questions before you hire a contractor.