how do you pay for home improvements?

[ADisneyQueen]

The house we sold last summer was new, so we don't know much about home improvements. The house we are in now is 11 yrs. old, but the bathrooms need updated. I really hate our master bath and want the whole thing remodeled. It is done in black and white. It is so ugly. DH wants to pay cash, but I hate taking a lot of money out of our savings, plus we may need to buy a new car. Do you get home improvement loans from the bank, and what is the interest? I had heard that you can get the loan attatched to your mortgage when buying a house. I guess that's what we should have done.

 

[DVC-Don]

We used a Home Equity Line of Credit to redo our kitchen.

 

[Am_I_There_Yet]

The house we sold last summer was new, so we don't know much about home improvements. The house we are in now is 11 yrs. old, but the bathrooms need updated. I really hate our master bath and want the whole thing remodeled. It is done in black and white. It is so ugly. DH wants to pay cash, but I hate taking a lot of money out of our savings, plus we may need to buy a new car. Do you get home improvement loans from the bank, and what is the interest? I had heard that you can get the loan attatched to your mortgage when buying a house. I guess that's what we should have done.

You can get a home improvement loan, or a home equity line of credit (HELOC). Here in Texas, we have very strict rules on how much you can borrow. We can only get 80% of our equity, so you may want to check your states rules with a lender.

You can expect equity loan rates to be higher than your typical mortgage rate. Our rates are running anywhere between 8-10% right now. The equity loan takes a backseat to the mortgage, so you'll have two liens on your home.

I've remodeled a kitchen and a hall bath so far, and we paid cash for both of them. We didn't take money out of savings, we planned for what we wanted to do, and set money aside specifically for it.

Now, for my master bath remodel, we're taking money out of our equity, because it's going to be a much bigger project and we're going to replace our roof at the same time.