Ignore the "no debt" absolutists. Did they take their own advice when purchasing a house? No, they didn't, because they wanted to enjoy it years before they could have afforded to buy it for cash.
Obviously getting deep into unaffordable debt would be bad, but you're on Bogleheads, and I don't expect that's where you were headed.
The answer does depend on your financial situation, on the benefit of enjoying the upgrades earlier, and unfortunately, it also depends on the unpredictable factors of future interest rates and labor/materials cost.
We did a major remodel last year. If we'd done it a few years earlier it would have been vastly cheaper, even if we'd had to take a high-interest loan (but of course interest rates were low then). We were trying to save up for the remodel, but the costs increased faster than we could save. However, that was a price increase like we hadn't seen for decades, so it seems unlikely that it will happen again in the near future... but who knows.
If you do take out a HELOC, think about strategies for that given that we expect falling interest rates. One approach is to open the HELOC for more than twice what you think you'll need. If you fix your rate (because fixed rates are lower than variable rates), then if/when rates drop considerably you can draw again at the lower rate, fix that, and use the money to pay off the higher-rate debt.
And of course follow Dottie57's advice to thoroughly think through the remodel before doing it.
Obviously getting deep into unaffordable debt would be bad, but you're on Bogleheads, and I don't expect that's where you were headed.
The answer does depend on your financial situation, on the benefit of enjoying the upgrades earlier, and unfortunately, it also depends on the unpredictable factors of future interest rates and labor/materials cost.
We did a major remodel last year. If we'd done it a few years earlier it would have been vastly cheaper, even if we'd had to take a high-interest loan (but of course interest rates were low then). We were trying to save up for the remodel, but the costs increased faster than we could save. However, that was a price increase like we hadn't seen for decades, so it seems unlikely that it will happen again in the near future... but who knows.
If you do take out a HELOC, think about strategies for that given that we expect falling interest rates. One approach is to open the HELOC for more than twice what you think you'll need. If you fix your rate (because fixed rates are lower than variable rates), then if/when rates drop considerably you can draw again at the lower rate, fix that, and use the money to pay off the higher-rate debt.
And of course follow Dottie57's advice to thoroughly think through the remodel before doing it.
Statistics: Posted by Charon — Sat Jul 27, 2024 3:11 pm — Replies 6 — Views 556