Shop around

For all major work, get quotes from at leats these reputable contractors, and make sure the description of the job is exactly the same when you compare prices. Be certain you understand whether the contractor is giving you an estimate that could increase after the work begins or a firm quote that he'll put into a contract.

Expect the unexpected

Many inexperienced homeowners underestimate the cost of remodeling. Even if you do know the fixed costs involved, there are almosr always surprises along the way. Older houses, especially, often reveal their secrets only after you've removed the paneling, steamed away wallpaper, or pulled back the old carpet. So plan ahead: Once you determine just how much you can afford, create a budget that's 10 to 20 percent lower to give yourself a cushion.

Do the grunt work yourself
Good carpenters and electricians are worth the money, but you don't need to pay skilled professionals to do unskilled work. After you get an all-inclusive price for having tile or hardwood installed, for example, ask the contractor if he'll drop an hour or two of labpr costs if you rip out the old carpet and prep the floor before he arrives. You may also be able to save money on a kitchen or a bath renovation if you remove the old fixtures or do some of the demolition yourself.

Think long-term

While you want to save money on your renovation now, remember that an added expense may save you more in the long term, Using inferior bathroom fixtures or doing your own plumbing, for example, may wind up costing hundreds of thousands of dollars in water damage or in repairing mistakes you made. Think about energy costs as well. A high efficiency furnace may pay for itself in the lower gas bills if you plan to be in the home for a number of years.

Use low-cost financing

Major renovations can easily run into the tens of thousands of dollars. Rather than using credit cards to finance the work, consider taking out a low-cost home equity loan. Home equity lines of credit (HELOCs) may be even more attractive, as they allow you to draw on the funds as you need them rather than all at once.