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4 ways to pay for a remodel without using your home equity

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Erin Nelsen’s house could use more walls.

The certified financial planner works outside the home from an office in Cypress, California. But her husband, Shawn, works from a makeshift home office in their kitchen. From there, he hears his kids attending online school through an opening to the adjacent dining room.

To accommodate his new working conditions, Shawn taped a “sound-insulating foam barrier” in the opening, Nelsen says.

Other homeowners have used their time sheltering in place to make more permanent changes. About one-third (34%) of homeowners who have done improvements since March 1 started sooner than planned because they had more free time at home during COVID-19 social distancing measures. That’s according to a NerdWallet survey conducted online by The Harris Poll among more than 800 homeowners who have done home improvements since March 1.

Seven percent of those renovating homeowners used a home-equity loan or line of credit to pay for the update.

Equity can be a low-cost resource to finance your remodel, but it takes time to build up, which may make it difficult to start a project earlier than planned. Homeowners looking for faster options can consider the following non-equity ways to pay for a remodel.

Use your own money

The most common way people have been paying for their renovations is with their own money, according to the survey.

Roughly one-third (34%) of homeowners who have made home improvements since March 1 paid for their renovations with available funds from their checking accounts or current paychecks. One quarter (25%) used money they had specifically saved for the project.

Using your savings lets you cover renovations and repairs interest-free, says New Jersey-based certified financial planner James Kinney.

That means if you don’t already have the funds to remodel your kitchen, “my approach would be for you to sit and look at the kitchen a little longer,” he says.

Atlanta-area CFP Jovan Johnson says he sets money aside each month to someday pay for a remodel or repair.

“When I get to that point of wanting to do a home improvement project, I already have ‘X’ dollars I can pull from before I even have to consider home equity or personal loans,” he says.

Charge a credit card

Credit cards typically have interest rates between 12% and 23%, making them among your most expensive financing options, but 29% of homeowners who have done home improvement projects since March 1 say they put their renovations on plastic.

If you choose credit cards to pay for the remodel, make them work for you. For example, some cards can give big rewards on certain purchases, including home improvement expenses. Stores may also offer cash back, which could add up if you’re planning to buy most of your supplies from the same store.

Borrowers with good or excellent credit (690 or higher FICO) are the most likely to qualify for these cards.

If you already have money saved for the renovation, but still want to reap credit card rewards, Johnson recommends using rewards cards to pay for the remodel and then paying them off in full each month. This way, you can build credit and get cash back without paying the card’s interest rate.

See: How to avoid common and costly home renovation mistakes

You can use a credit card beyond what you have saved, but try to pay the full balance to avoid letting the interest outweigh the rewards.

For small projects — say, a few thousand dollars — consider using a 0% APR credit card, says San Diego-based CFP Jamie Lima. If you can pay the project off during the interest-free introductory period, typically 12 to 18 months, you can upgrade your credit and your home at the same time.

“You benefit from getting the project done, you’re getting to build credit for yourself, you’re borrowing at a 0% interest rate,” he says. “It’s a win-win all the way.”

Get a personal loan

Unsecured personal loans are a less common choice for renovations — 8% of homeowners who have made improvements since March 1 used one, according to the survey. But they can be a way for homeowners to start their project quickly.

Most lenders say they can fund a loan within a week, while home-equity loans can involve time-consuming underwriting and appraisal processes.

Personal loan rates are between 6% and 36%, which is higher than home-equity loans or lines of credit, but lower than some credit cards. Borrowers with standout credit are more likely to qualify for lower rates on a personal loan, Johnson says.

As your loan amount increases, your APR will inflate your monthly payment, so he recommends keeping the project’s cost around $20,000 or less.

Personal loans can also have short repayment periods around two to five years, so you’ll likely pay more each month than you would with home equity options, which have repayment terms of 10 years or longer.

Some lenders let you pre-qualify to see your rate and loan amount. You can use that information to calculate your monthly payments. Since these loans come in a lump sum and are repaid in fixed amounts, you can make a plan to fit them into your monthly budget.

Get a government loan

The government offers Title 1 loans for qualified borrowers who want to make specific updates to their home, including buying appliances, making your home more accessible or improving its energy efficiency.

Also see: Which DIY home renovation projects could add the most value to your house — and which ones to avoid

You can borrow up to $25,000 for a single-family home, and repayment terms are typically between 12 and 20 years.

“You get the benefit of a home-equity loan without having equity on the line or the home as collateral,” he says.

There are some limitations, though. Loans above $7,500 require you to use your home as collateral. You also need to have been in the home for 90 days or longer.

Of the homeowners who have taken on home improvement projects since March 1, 6% paid for it with a home repair or improvement grant from the local, state or federal government.

Not all lenders offer government loans, so search the Housing and Urban Development website for one that lends in your state to learn more about their criteria.

When should you use equity to pay for a remodel?

Home equity can be a low-cost resource for remodels. Understanding the pros and cons of each financing option and comparing them can help you find one that best fits your budget.

For example, Nelsen in California says borrowers who use equity to pay for a remodel can write the interest off on their taxes and reduce the cost of borrowing. But these loans are secured by your home, which the lender can seize if you can’t repay.

Long repayment terms on home-equity loans and lines of credit can make monthly payments more manageable and give you the option to pay the loan off early, she says.

Home-equity loans have fixed rates, while a home equity line of credit has a variable rate. So if you want to take advantage of low rates, she says, remember that they could increase over the line of credit’s long lifetime.

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I have a First World problem: I earn $500K, and have $1 million in assets. Should I buy a $30K bracelet during a global pandemic?

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I have a mundane First World problem that may or may not warrant your attention. But I read your column, and thought you could help me. It’s something that has been troubling me for some time. Should I buy a $30,000 piece of jewelry?

I have a $500,000 stable annual income, no debt, my kids have their private college tuition and retirement fully funded, and I have an additional $1 million in investable assets in various bank and brokerage accounts. My husband and I are in our late 40s, early 50s.

We have always lived a financially disciplined lifestyle. We avoid impulse buys, while spending liberally on things we truly enjoy and care about, including annual multi-week vacations for the family, organic food, home upgrades for our hobbies, and supporting our favorite charities.


‘The good news is, this particular brand of jewelry has been holding its value very well over a long horizon.’

I personally adore quality designer jewelry, and get a little thrill every time I look at them on my wrist and finger. I have never spent $30,000 on one piece of jewelry, and I feel some guilt spending that much money on something primarily for myself, not the family.

This particular piece, a bracelet, has been on my radar since 2019, and I found myself coming back to it time and again. I spent hours following online discussion threads, researching its resale value (in case my daughter doesn’t want it) and insurance against loss, etc.

The good news is, this particular brand of jewelry has been holding its value very well over a long horizon; in fact, it boasts the highest resale value in the last couple of years, according to top luxury resale and consignment sites.

However, I just can’t bring myself to pull the trigger: spending almost 3% of our investable assets on a piece of jewelry just feels very excessive to me. I tell myself to reconsider in a few years when we get to a higher net worth to make the purchase easier to justify and stomach.

My husband said I should buy it sooner, and enjoy it for a few more years. I realize the jewelry aspect makes this a highly personal-preference question. I guess a more generic question could be, does a $30,000 discretionary spend sound reasonable in our financial situation?

A Bracelet Lover

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Dear Bracelet Lover,

Before the world and its mother comes down on you like a ton of bricks for asking this question during a pandemic — and before said world and its mother comes down on me for answering your question — I will say that I find your letter curious. Not “$30,000 bracelet” curious. But curious, nonetheless.

The reason: I don’t believe this magnificent, guilt-ridden obsession is really about the bracelet at all. The object of your desire could be anything: It could be a Tesla Model 3 or a used GT-R. It could be a Fabergé egg, aluminum siding, or even a $30,000 Hermès Kelly clutch bag.

It’s extravagant in the way a motor vehicle or kitchen reno is extravagant. Did you know the average cost of a light vehicle in the United States is over $40,000? You can’t drive a $30,000 bracelet, but you can wear one and drive a $10,000 car to get you from A to B. Who’s more mundane now?


‘The reason: I don’t believe this magnificent, guilt-ridden obsession is really about the bracelet at all. The object of your desire could be anything.’

I get it. There is a thrill in buying something so outrageously out of your price range. How will that make you feel? What kind of connection will you have to this object? Will other people notice it? Will you tell them how much it cost? Would owning it confirm any privately-held ambitions you have for yourself?

You are not just buying a $30,000 bracelet. You are, perhaps, buying your way out of an old way of seeing yourself. That may or may not last. Or maybe you truly believe that it will bring you joy as a family heirloom, and you can resell it at the same or a higher value, if a prospective buyer or the real world come knocking.

Will wearing such an item give you more confidence to sail past the snootiest members of your tennis club or the maître d’ at the most popular Michelin restaurant in town? Please know that I’m not speaking about you here. I’m talking about anyone who splashes out, during a pandemic or not.

About the pandemic. Researching this purchase may lift your spirits, and actually help you escape the mundane. It may or may not be a coincidence that you choose now to do something so bold and new. It’s a $30,000 sop to coronavirus. A million-dollar spit in the ocean during a truly difficult year.


For some people, spending $30,000 on one luxury item is a way of showing their spouse or, indeed, themselves that they are worth that much.

For some people, spending $30,000 on one luxury item is a way of showing their spouse or, indeed, themselves that they are worth that much. The diamond industry, for better or for worse, is based on that conceit. You need a rock on your finger to show the world that it’s true love.

For others, it’s about showing the world that you can’t mess with them and, like Leona Helmsley, the Queen of Mean, will show the world there are no little people, only big handbags — like this woman who sued a country club in New Jersey after a waiter spilled wine on her $30,000 Hermès Kelly clutch bag.

Would I spend $30,000 on a piece of jewelry if I were in your position? Probably not. Should you? That’s not for me to say. That’s for you to find out. The great Suze Orman would probably give you a “yay” or “nay” on the matter, but I’m not Suze Orman. That’s not my gig, nor is it my style.

I’ll tell you what is my style: A pair of chocolate brown Donna Karan trousers that I bought for a friend’s wedding in New York 20 years ago. I had traveled here from Dublin. A friend took me to Saks Fifth Avenue. I was fresh out of college, and thought, “How expensive could they be?”


You have formed an attachment to this bracelet, or at least to the idea of this bracelet. Let that go for a moment. What else you could do with $30,000?

I rolled up to the cash desk after they were adjusted three ways from Sunday, and the clerk told me they were $450. I handed over my fresh-out-college credit card and watched in horror as the cashier rung up the equivalent of one month’s rent. I was Jason, and those threads were my golden fleece.

I loved those dress pants. They moved like slow motion. I cared for them like priceless silk and, one day, I dropped them into a dry cleaners in Dublin. I noticed some lights were out that day, but I paid no heed. It was 2008. The dry cleaners went bankrupt, and padlocked its doors. I never saw those Donna Karan trousers again.

What has all that got to do with your $30,000 bracelet? Three things. 1. This piece of jewelry has something to teach you, and you don’t have to buy it to learn what that is. 2. This is a trouser- and judgment-free zone. 3. Our monetary dilemmas are rarely about what we think they’re about.

You have formed an attachment to this bracelet, or at least to the idea of this bracelet. Let that go for a moment. What else you could do with $30,000? Something different, but equally novel that perhaps could also have an impact? You don’t even have to spend the money on you.

Buy or don’t buy it. Remember this: However it makes you feel, you can feel that way without it. Whatever properties, provenance or millesimal fineness this piece of jewelry holds, your own qualities as a human being outweigh it. Whatever obsession it sparks in you, you can out-spark it.

The Moneyist: Before I give my fiancée a $7,000 diamond engagement ring, I want her to promise to bequeath it to my daughter

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

The Moneyist: ‘The thought of her keeping these ill-gotten funds just chaps my behind’: My granddaughter, 7, lives with me — yet her mother received her stimulus





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My son, 18, says I should hand over the $1,400 adult-dependent stimulus. He claims it belongs to him. Who’s right?

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Dear Quentin,

We’re having a debate in our house regarding the latest stimulus payment. I claim head of household and have two 18-year-old adult dependents that I claim on my taxes. I received a $1,400 stimulus for each of us. My 18-year-old son claims that I must give him this money stating that it is meant to be given to the adult dependent.

I say it’s not meant for him, as I claim him as a dependent on my taxes because I pay more than half of his household expenses (actually all of his expenses) and this money will be used to offset the expense of raising him. If you have any information you can share to shed some light on the debate at hand, I’d much appreciate it.

I keep searching the internet for some proof that I must give him this money but keep coming up empty-handed.

Fingers crossed

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Dear FC,

If the money was meant for your son’s use, it would have been sent to your son. The clue is in the wire transfer. He is a dependent and, as such, the money is meant to be used for his care. They are emergency funds to be used for food, clothing, utilities, and anything else that adds to the cost of running a household and, yes, stimulating the economy.

Let’s assume your son is correct in his belief that the money is for his use, and could (or should) be used for his own expenditures — from meals out with friends to new sneakers. In that case, he should be of independent means and pay for everything else: rent, food, transportation. I have a feeling that $1,400 would be used up pretty, pretty, pretty fast.

If you have a balance on your credit card for family purchases, what reason would your son have for you not using part of the total economic stimulus payment to pay that balance off? This is an opportunity to lay bare the economics of running a household, so your son can have a bird’s eye view on how to manage a budget, and the costs of each family member.


‘The problem with putting food in the cupboards: Some kids think it appears there magically. And I don’t only mean that the food is conjured up through some act of existential bookkeeping.’


— The Moneyist

The problem with putting food in the cupboards: Some kinds think it appears there magically. And I don’t only mean that the food is conjured up through some act of existential bookkeeping, but that it actually makes its way from the supermarket bags to the cupboards without any human intervention whatsoever. It takes time to earn the money, shop and to put those groceries away.

As an adult dependent over the age of 16, your son did not qualify for the first two stimulus checks. Under President Biden’s $1.9 trillion American Rescue Plan, however, parents may claim their adult children as dependents. The amount is based on your income (payments fall for individuals earning $75,000 a year and up and couples making $160,000 a year or more).

The $1,4000 is not based on your son’s circumstances and, as such, the money should be used at your discretion. If you can afford it, however, I suggest talking through your son’s priorities and working with him on how he could spend all or part of the $1,400. It may be that you can help your son feel empowered to spend it on his own upkeep.

But — and this is a big “but” — if he wants you to buy necessities while he uses the money for his own enjoyment, that’s called “pocket money” not an economic impact payment, and that’s something he is given as a child or needs to earn himself. If you decide upon a potential compromise, the final answer will be determined by your son’s own financial priorities.

The Moneyist: I’m a farmer in my late 30s, live a frugal lifestyle, and my son has a disability. Should I pay extra on my mortgage — or save for retirement?

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.





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These money and investing tips can help you decide whether to ‘sell in May and go away’

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Don’t miss these top money and investing features:

Sell in May and go away? Not so fast. These money and investing stories, popular with MarketWatch readers over the past week, can help you position your portfolio as the U.S. stock market enters its typically weaker six-month stretch — although that certainly wasn’t the case in 2020. So while it makes sense to seek out market sectors that are stronger in the summer months, it doesn’t change the fact that time in the market, and not market-timing, has been the most reliable creator of wealth.



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