YOUR MONEY
5 Ways to Finance Home
BY JENNIFER NELSON W
hether you’ve got your sights set on a kitchen remodel, want to spruce up your
primary bathroom, or need more space for aging parents or boomerang kids, home renovations are popular. About 61% of homeowners would
rather renovate than move, according to a survey from JPMorganChase, and nine in 10 baby boomers plan to make changes to their homes so they can age in place. But figuring out the smartest
way to pay for a renovation can be confusing. Do you take out a home equity
loan? Pull money out of your IRA? Refinance? There are costs and benefits
associated with each option, and they aren’t always obvious. The first step is to figure out a
budget. A Hanley Wood Market Intelligence study in 2024 found that kitchen renovations can cost anywhere from $27,000 (for a minor facelift) to over $150,000. Typical bathroom renovations
range from $20,000 to $60,000, and an age-in-place renovation can cost
90 NEWSMAX MAXLIFE | NOVEMBER 2025
Renovation
And one option you should avoid at all costs. ::
as little as $3,000 (installing grab bars, ramps, etc.) or over $40,000 (for widening hallways and doors, adding an elevator, etc.), according to MassMutual. Talk to at least two contractors
and/or designers to get a detailed estimate. Here are some avenues to consider.
1
HOME EQUITY LOAN It could be a good time to tap your
home equity. Right now, the collective home
equity in the U.S. is at roughly $35 trillion — nearly an all-time high, according to the Consumer Financial Protection Bureau. And the average homeowner has
47% to 48% equity in their home. If you owe $250,000 on your house
and its market value is $500,000, you have $250,000 of equity. Most lenders won’t let you borrow the full amount of your equity; instead, you’ll be able to borrow up to 80% to 90% of it. Home equity loans are a good
option and function like any regular loan, where you take out a lump sum at the start of your project and then pay it back monthly. And as with any type of home loan, interest rates for home equity loans vary according to the term length and your credit rating. The benefit of using a home
equity loan is that “it has a fixed interest rate and fixed payments,” says Ryan Whitcher, CEO of
Pros and Cons of Tapping Home Equity
Home equity loans or HELOCs (home equity line of credit) can make sense, depending on the type of renovation and your
ability to pay them off quickly,” says Stephan Shipe, a finance professor at Wake Forest University and founder of Scholar Financial Advising. “If the renovation meaningfully adds to the value of the home and
you have a plan to repay the loan, this can be an effective strategy.” One benefit of HELOCs is that the interest on them is tax- deductible (provided you itemize your taxes).
SKYNESHER©ISTOCK
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