Loan for renovations?
May 9th
We bought our home just over a year ago and the value of it has already risen significantly due to this hot market (close to 150k). The main floor of our home is in need of some pretty major remodeling. New flooring, baseboards, and doors throughout. Also needs a kitchen remodel and we'd like to knock out a fireplace that's in the middle of our living room to create more space for our Bible study small group that meets here. There's also a main floor bathroom that needs updating. We don't have any debt other than our mortgage. We are on a single income since I stay home with our 3 young kids. We are wondering if this is a situation where it makes sense to take out a loan since it would take us an incredibly long time to save up this amount of money. It would help our house gain even more equity. We don't like being in debt though and have worked hard to stay out of it. These remodels would be most easily done all at once with the layout of our house. We would like to stay in this home for at least the next 20 years or so while we raise our kids Just needing some wisdom ☺️ thanks!

May 12th

Several months ago I would have told you to refinance taking out cash to fund the upgrades. With the recent increase in mortgage rates, this approach probably no longer makes since. You did not mention the size of the loan which would be a factor in your decision. Contact a local credit union about a home equity line of credit. I always prefer to cash flow home improvements avoiding a loan. Work the numbers and make an informed decision.

May 13th

I was recently chatting in my small group about the housing boom. One of the members said, “I’ve never seen home values decline.” I responded that was she was not old enough. Ecclesiastes 1:9 says, “What has been is what will be, and what has been done is what will be done, and there is nothing new under the sun.” Just because your home equity seems high, it is not necessarily time to take on more debt. Home equity is not “found money.” Home equity does not increase your income because you do not realize it until you sell your house. If you take out a home equity loan, you will pay for that loan out of your current income, which has not increased. Ron Blue reminds us that there are only four things we can do with money – Live, Give, Grow, Owe. If you increase the “Owe” portion of spending pie, you must reduce one of the other three. Can you afford to reduce your lifestyle spending, or reduce your retirement or education saving, or your giving? “The rich rules over the poor, and the borrower is the slave of the lender.” - Pro 22:7 ESV. Pray about this home investment and consider if this is really the time to take on more debt.
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