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Homeowners are self-gifting this year, planning costly holiday renovations

Aly J. Yale
The Mortgage Reports contributor

Giving the gift of renovation

Homeowners are planning to spend big this holiday season — but not just on gifts. According to a new survey, a whopping third of homeowners are planning home improvements this season, opting to spend 10 times what most Americans have allotted for gifts.

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Investing in improvements

According to a new survey from uniquely-named mortgage lender Mr. Cooper, 30 percent of homeowners plan to make home improvements before the holidays this year.

The average budget for those improvements? A surprising $6,000 — 10 times what the majority of Americans plan to spend on gifts.

Among those planning home renovations, most are focusing on the interior. Another 35 percent plan to upgrade the bathroom, while 36 percent to overhaul their kitchens.

Thinking of renovating? Focus on these high-ROI I home improvements

Paying for those home improvements

If data from a second study — this one from Houzz and Bank of America — is correct, most of those renovation costs will be paid for with secured financing, things like home equity loans, cash-out refinances and home equity lines of credit.

According to the study, one in seven homeowners uses some type of secured financing to cover their home improvements.

It’s especially common on larger projects. About 30 percent of homeowners spending $50K or more on their renovations used some form of secured financing in 2017.

HELOCs poised to rise; tappable equity jumps for most homeowners

Generation X homeowners are the most likely to use secured financing to pay for their improvement projects. Most finance between $12,800 to $22,200 in expenses.

The study also found that buyers who do finance some or all of their project tend to spend more than all-cash renovators.

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Get today’s mortgage rates

WIth home equity at all-time highs, homeowners have access to serious cash should they choose to refinance, secure a HELOC or take out a home equity loan. Considering one of these moves? Then shop around and see what mortgage rates you qualify for today.

Verify your new rate (Oct 24th, 2020)