Home Equity Loans or Savings? – How are Americans Paying for Home Remodeling?

FOR IMMEDIATE RELEASE
Editorial Contact:
Catherine Edwards
Corporate Communications
408 462 0209

catherine@planese.com

 

44% of US homeowners plan to use home equity loans, and 42% plan to use cash from savings to pay for their remodels are the findings from a new survey fromPlanese.com and Remodelormove.com.

Sunnyvale CA December 3, 2013.—Proceeds from refinancing and home equity lines are the most popular ways for homeowners to pay for home remodeling expenses, according to a recent survey by Planese Inc. The survey, conducted via remodelormove.com, found that 44% of the homeowners who responded planned to use their home equity to finance their remodel.  “Home prices are on the rise, and that is creating equity levels we haven’t seen for years,” says Rocky Foroutan, CEO of lender411.com. “Using this equity to make improvements to the homeowner’s asset – their home – makes good sense.”

Almost as many homeowners – 42% – are using cash from their savings to pay for the remodel or addition to their homes.  “With interest rates at record lows and the stock market at record highs, it is a good decision for some homeowners to move some money around and now invest in their homes to get the best returns, “ says Dan Fritschen, homeowner advocate and founder of remodelormove.com. “If your savings account is only paying one-half percent and you’re concerned the stock market won’t keep going up forever,  investing in your home – and in your quality of life – by remodeling your kitchen, adding a bathroom or a master suite, could be your best investment opportunity.”

14% of respondents are borrowing from their retirement accounts or are using credit cards and personal loans to pay for the work to be done.  “Both of these financing methods are reasonable alternatives for financing a remodel, but each comes with a variety of risks,” Fritschen said. “Credit cards and personal loans that are at promotional rates of 0% for a year or two, or even those offering a 10% discount on purchases can be a great deal IF they are managed well.  However, any savings at the beginning of the offer are quickly lost if a homeowner ends up paying 10% or 15% or more annually on what they spent to remodel.  In this case, it may be better to reduce the scale of the remodel, or postpone the remodel until the homeowner has enough equity or can save up enough cash to pay for the project with cash or by refinancing their home mortgage.”

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