How to Pay for Home Improvements Since Spending Has Soared
Home Improvement

How to Pay for Home Improvements Since Spending Has Soared

Homeowners are spending more and more on home improvement projects. 

Homeowners who tackled at least one house project last year spent about $9,500 on average on home improvements across 2023—a 12.5% jump compared with 2022, according to a report from home improvement platform Angi. Younger homeowners spent even more, with those ages 27 to 42 notching total improvement bills of nearly $700 more than the average.

The jump is a combination of several things: First, more homeowners are looking to improve their homes rather than buying new ones. With mortgage rates well above 7% for much of 2023, existing homeowners—80% of whom have rates of 5% or less—just aren’t very motivated to enter the housing market. Instead, they’re focusing on making their current homes more livable.

Inflation, rising construction costs and contractor shortages also factor into increasing improvement spend. As of October 2023, the construction industry had 457,000 unfilled job openings—the highest level in nearly two years. This shortage leads to higher labor costs and creates a bottleneck for those seeking professional construction help.

Still, that doesn’t mean you can’t improve your home in the new year. Here’s what you can expect to pay—and how to cover those costs more affordably.

What popular home updates cost

The most popular home updates last year were interior painting, adding new appliances and remodeling a bathroom, according to Angi. Bathroom remodel costs vary based on location and size of the project, but generally, you’ll pay between $6,600 and $17,000. The average cost nationwide was $11,500.

Smart home technologies—such as smart thermostats and doorbell cameras, for instance—were another common home upgrade this year, with 24% of homeowners surveyed by Angi saying they installed one. You’ll typically pay between $80 and $260 for these devices, not including installation (though you may not need a pro’s help for some of these). 

Finally, new flooring and kitchen remodels, which cost between $10,000 and $20,000 for a minor update and up to $70,000 for a major one, were also top projects for homeowners in 2023. 

Paying for home improvements

Over a third of homeowners financed their home projects in some form or another last year. The most popular noncash payment method was a credit card, according to Angi’s survey, with over 37% of homeowners saying they used one to cover home improvements. 

Though they’re popular, credit cards come with high interest rates—currently averaging over 21%—and, unless you can pay the balance off in full each month, likely aren’t the most economical option if you’re eyeing home improvement projects in the coming year. (That would be a flush savings account or emergency fund, which financial pros say all homeowners should have). 

If you have to finance, though, a home equity lines of credit, or Heloc—which about 24% of homeowners used to cover home improvements last year—may be a smart choice. These work similarly to a credit card, letting you withdraw cash from your home equity over a period of 10 years, but usually have much lower interest rates—currently around 10%. (Rates are variable, though, so be mindful: Your rate and payments can change over time.)

Home-equity loans are another option, but instead of a credit line they let you turn your home equity into a single lump-sum payment. These have fixed interest rates—averaging below 9% right now—and allow you to pay off your balance over five to 30 years. 

If you opt for any of these options when financing home improvements, try to beef up your credit score first, as that can play a role in what interest rates you qualify for. Comparing loan offers is also a smart way to ensure you’re getting the best deal. 

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