Step One: Create your plan and budget.
Regardless of the size of your project, you'll want to spend a lot of time on this step. List out in detail all the things you want to accomplish with your renovation.

Next, figure out how much you want to spend. You may have a certain amount of cash on hand, or plan to sell some assets to fund your project. If you plan to borrow money, consider how much of a monthly payment you can afford and for how long. It's important to consider your budget before you talk to a contractor, so you won't be tempted to spend more than you can afford.

Step Two: Find a contractor.
This is the person who will be responsible for coordinating every aspect of your project, so be selective. Get recommendations from friends or family and conduct your meeting like an interview. How much experience does he have? Does he have references? How attentive is he to your needs and concerns? Make sure he's aware of any time constraints (like a celebration or new baby).

Step Three: Secure financing.
Once you and your contractor have agreed to the scope and cost of the project, you're ready to secure the financing. If you are borrowing money to pay for your renovation, now is the time to apply. A cash-out refinance, home equity loan or home equity line of credit can be a smart (and relatively inexpensive) way to pay for a renovation.

Step Four: Endure the mess.
Depending on the size of your project, a renovation could be a major disruption to your life. Plan for all sorts of hassles, like workmen arriving early in the morning, not being able to get to areas of your house (including the driveway). If your project impacts the kitchen, remember to account for many meals out. If your project is especially large or inconvenient, consider moving out completely for a few weeks or months.

Step Five: Enjoy!
Once the dust has cleared and the construction dumpster has been hauled off, it's time to enjoy the fruits of all that labor and hassle. Don't forget to celebrate, even if it's just noticing the lovely silence of no workers stomping through your home.

• Selling one house and buying another is a time-consuming and stressful activity.
• You can find a house with everything you need, in move-in condition, and begin enjoying it immediately.
• By moving, you will avoid the discomfort of living for months in a dusty and noisy home.
• If you move to a new neighborhood, you will have to uproot your whole family. This can include new schools for your children and a new commute to work.
• When you buy a new home, you know exactly what you are getting into, financially speaking.

Renovating

• You will need to find out if your planned renovation meets zoning regulations, requires building permits, or needs approval from potentially affected neighbors.
• By designing your own renovations exactly as you would like them, you can create your dream house!
• Renovations are messy, noisy and inconvenient.
• By staying in your current house, you will avoid the stress of being uprooted and moved to a new location.
• You run the risk of major structural complications and cost overruns, so be sure of what you're getting into.

• Copy of the most recent month's pay stubs.
•  W-2 forms for the last 2 years.
• Proof of assets, including checking and savings account statements, mutual funds, stocks, bonds, investment properties, etc. In most cases, you'll need 2 months worth of statements for these accounts.

Documentation and account numbers for liabilities, such as personal loans, auto loans, credit card accounts, etc.

In addition to the above documentation, if you are self-employed, you should have a year-to-date profit and loss statement prepared, as well as copies of your 1040 tax returns - include all pages/schedules - for 2 years. If you rely on other income sources, such as alimony, child support, or social security, you will need evidentiary documents for those, as well. If you're divorced, you'll want to have a copy of your divorce decree on hand.

After you've gathered up all your documents, you should begin to apply for your mortgage refinance loan. You will probably want to start with your current lender, but don't stop there! As with any major purchase, it's wiser to compare at least 3 different offers…possibly more. Comparing offers allows you to get a better idea of what rate you may be able to qualify for, and puts you in a better negotiating position with the lenders.

When you receive your offers, pay close attention to the interest rate, points and closing costs. Looking at all three will give you a broader view of how your offers compare. Talk to the loan officers, and see if you can negotiate a better interest rate. Quite often, the initial rate offered is not the best a particular lender can offer.

In January, many consumers find themselves saddled with holiday debt. If you've run up your credit cards traveling or buying gifts, you might consider paying them off when you refinance your mortgage. You can do this with a mortgage refinance/cash-out loan. A cash-out refinance allows you to "roll" your outstanding debts into your new mortgage loan amount, and start fresh. Just be careful you don't bite off more than you can chew; pulling cash out may cause an increase in the mortgage interest rate, as well as a larger monthly payment.