How to Tackle Your Home Improvement Project(s) in 2023

Since the onset of the pandemic, we've all had to adjust to more time at home - working, school, cancelled vacations, and bringing social gatherings "in-house.”

This has led many of us to rehab, remodel and renovate our spaces so that our homes are more functional, or simply more enjoyable.

What once felt like a "someday, maybe" goal has perhaps become a more immediate need.

For those of you still considering this financial goal, we encourage you to discuss with your Triune advisor how it best fits into your Financial Life Plan. For a "jumping off point", here is our guide for how to tackle your home improvement projects in 2022. 

We hope you'll find these guidelines helpful, or perhaps have a friend or family member worth forwarding this article to.

💰 Paying Cash

How you pay for your home improvements will depend on your unique situation and the scope of your project.

Saving up and paying cash is the ideal way to accomplish this goal. Using saved up funds ensures that you can truly afford the project, and you avoid paying excess fees and interest that come with financing. 

A few things to consider before you start writing checks:

• Will you still have enough for your emergency fund?

  • Think of your emergency fund amount as the "zero" in your savings account. You can't go below zero, so if you have to spend into your emergency fund, that's a clear signal that you do not yet have enough for your project.

• What other goals might you have to sacrifice?

  • Are there other large expenses you may have to forego in order to pay for your home improvements? Be sure to consider these trade-offs in advance.

Of course, paying cash requires more patience and may not be possible depending on the size and timeframe of your project. If you can't afford to pay cash today, consider if that is a sign for you to postpone your project, or perhaps scale it back.

🏦  Financing Options

When it comes to financing a home improvement, you have a few options. You could get a HELOC (Home Equity Line of Credit), a home equity loan, or a home improvement loan, or do a cash-out refinance. 

• HELOC

  • This option is likely to provide you with the most flexibility. This is a secured loan (backed by your home), and usually carries lower interest rates than other loans and credit cards. You'll likely need to have at least 15% to 20% equity built up in your home to qualify.

  • The biggest benefit is that it's a revolving line of credit, so you'll only start paying back the money you borrow as you borrow it. With today's long timelines for contractors to complete work, this can be a huge benefit to not have to pay on a loan until you actually use the credit line to pay for the completed project.

• Home Equity Loan

  • This option is best for someone who wants a fixed rate, can handle a new monthly payment, and needs the funds upfront. It is sometimes called a "second mortgage", but it's entirely separate from your primary mortgage, and comes with its own fixed rate and repayment terms.

• Home Improvement Loan

  • Because this loan is an unsecured loan, you do not have to have significant equity in your home to be approved. However, this loan typically comes with higher interest rates and can only be used for smaller projects.

• Cash Out Refinance

  • This option replaces your current mortgage with a new, larger loan with a new interest rate. Often viewed as a convenient loan because you maintain a single monthly payment on a single loan, this will make the life of your loan longer, and therefore more expensive.

A note on interest rates: As you're likely aware, interest rates have been rising sharply since the beginning of the year, so your financing options may be more costly than you previously calculated.

For those of you getting ready to tackle that big project this year, be sure you work with your Triune advisor to discuss all the pros and cons, and explore the best option for you. 

And don't forget to send us a pic of your new digs when it's all done!