Kitchen remodeling can breathe new life into a home while also taking a toll on the finances of the owners. Financing the remodel can make the project doable, but even passionate homeowners can make mistakes when doing so, such as underestimating the total completion cost.
When financing a kitchen remodel in Maryland, watch for five pitfalls which can have both short and long-term financial consequences. These are not mistakes with the planning or execution of the remodel itself but with the financing process. Below, we review these potential mistakes, the reasons homeowners may make them, and potential solutions for those who are already experiencing these issues.
1. Underestimating Project Completion Cost
Kitchen remodeling projects have a wide variation in prices depending on the size, material choices, and other contingencies. However, the average cost in 2025 is around $27,000, or between $75 and $250 per square foot. These numbers are generalized estimates since minor remodels can cost much less and major overhauls can cost as much as the homeowner is willing to invest.
For most homeowners, budgeting the kitchen remodel is an essential part of the process. However, many homeowners make a damaging mistake when doing so by not properly accounting for the project’s full completion cost. If you have tallied up the cost of the materials, appliances, and finishes without considering some other vital aspects, you may have already made this mistake.
One common omission is labor fees, which can account for as much as 25% of the remodeling bill. Homeowners can be swept up in material choices and how these align with their budget. However, design costs, contingency fees, permit fees, demolition costs, and more are all part of the project’s completion cost. Not all costs can be predicted, but homeowners should try to overestimate the project’s costs when planning their financing to avoid coming up short once everything is tallied up.
2. Failing to Leave a Safety Net
On the subject of budget estimation, many homeowners plan their kitchen remodels down to the last dollar, but this can lead to issues. Safety nets are an essential part of the planning process not only for permits and extra costs but also for issues that can’t be anticipated. These could include repairs that need to be completed during the remodel if the demolition team uncovers problems such as structural issues or plumbing leaks.
Additionally, any code violations uncovered during a remodel can impact the project timeline. Hidden wood rot, pest infestations, faulty wiring, and necessary code upgrades to core systems like insulation can all cause the project to go over budget. These issues incur costs for replacement materials, additional labor, inspections, and possibly redesigns.
For these unforeseen issues, homeowners should reserve at a minimum, 10% of their total remodeling budget, which can be reallocated into the project after essential inspection and demolition phases.
3. Relying on Only One Source of Financing
Homeowners can finance their kitchen remodels in several ways, including savings, personal loans, home equity loans, RenoFi loans, and HELOCs. One mistake made by many homeowners at the initial financing step is to rely on the first source of financing quoted to them without looking into other options.
This often happens when homeowners let their contractors arrange the financing. Rather than find loan terms that are the most favorable to the homeowners, many contractors use their preferred lenders to deliver convenience-based loans. This saves homeowners the minor headache of comparing lenders but can have a lasting negative impact on their finances.
Always compare different forms of financing to find the most competitive interest rates. Before committing to a finance option, look for credit-friendly financing terms that offer prequalifications. Especially for homeowners with good credit scores, securing favorable terms can have a massive impact on their cash reserves and taxes later.
4. Draining Savings with Excessive Interest
Financing a kitchen remodel offers a convenient way to offset the initial project costs. However, poor long-term outcomes are often the result of overrelying on high-interest credit to pay for the project, especially if parts of it go over budget.
Using high-interest credit cards to pay for part or all of the kitchen remodel is a costly but all-too-common mistake. Homeowners can burn through their emergency savings quickly by taking on new high-cost debts. Instead, low-interest financing such as home equity loans should be prioritized whenever possible to avoid excessive debt growth.
5. Neglecting Monthly Payment Forecasting
Monthly payment forecasts should include the principal paid on the financing and the interest, especially when multiple loans are needed. Many homeowners neglect to recognize how much of the cost is financed or which loans have higher interest, resulting in costly repayments with growing interest.
This can negatively impact the household’s cash flow, prolonging new expenses while interest mounts over time. Loan amortization tools can be helpful in modeling repayment scenarios and organizing the debt based on which loans should be paid first.
Working with a reliable and trusted remodeling company is actually a financial imperative. For homeowners who took the lowest bid or the fastest offer, they often find themselves financing a remodeling nightmare as well as corrective measures. When considering your budget the right way, use the same level of preparation for acquiring the right builder.
Contact Southern Maryland Kitchen & Bath for All Your Kitchen Remodeling Needs
Southern Maryland Kitchen & Bath uses a trusted team of contractors and designers to deliver high-quality kitchen remodels that cater to homeowners’ specific situations. Our team communicates every step of the project to make sure you know about any extra repairs, permits, or project timeline changes that are needed. We know that remodels are expensive, and we strive to make sure homeowners are never in the dark about what they need to do to complete their projects.
Contact our team today to learn how to plan, finance, and execute the perfect kitchen remodel with our experienced consulting, demolition, and design teams.
