How did you pay for your big remodel?

[karinothing]

We want to re-do the kitchens and bathrooms, probably all at the same time. I can see this cost over 100K easily. So how did you pay? We will be able to pay at a good chunk in cash, but I am not sure about all of it. Financing options seem a bit overwhelming. So what did you use? Did you finance? If so, what type of loan did you get? We have a large amount of equity in our house, so that isn't an issue. I just want someone to explain everything to me like I am 5 ha ha

[simpsongal]

We looked into this last year and settled on a HELOC. We had refinanced last year and even the cash out refi terms were just so-so compared to the HELOC. I think the origination fee was $250, it's a 10 year draw and we asked for a $75K line of credit - I believe DH researched it all online. We didn't want to borrow that much, but we wanted some cushion for just in case. Turns out, the cost of our project went up through scope creep and must-do items (crumbling retaining walls in our walkout). We ended up spending about $130K and took out about $50K from the HELOC. Payment is about $200/mo and we're hoping to pay it off by the end of the year so we can use the HELOC again for more house projects. Never ends does it? We were able to pay for the first part of our job w/cash and then draw on the HELOC later, so we could hold off on incurring interest-laden debt until necessary. If you end up buying things for your reno, I recommend using a credit card w/% cashback or other points - nice to get that benefit.

The downside of the HELOC is that the loan is secured by your home and the rate is variable. But we couldn't find any fixed rate loans otherwise available that made sense. I don't think rates will be skyrocketing soon, and we were pretty adamant about sticking to a budget (another reason we didn't request a higher credit limit on the HELOC). One benefit is the interest on the HELOC is tax deductible if you use it on your primary residence.

ETA: wanted to add - if you plan on refinancing, do it before you open the HELOC.  We had to subordinate the HELOC when we refi'ed which took extra time and we had to pay to secure the interest rate - there was also a subordination fee (so upwards of $500-600 in extra fees).  We looked into refinancing again since rates were so low and one lender said they wouldn't even consider a mortgage w/HELOC b/c subordinations were taking too long.

[karinothing]

thanks simpsongal. I don't think we are are planning on refinancing any time soon. Just looked into it but the closet costs weren't worth the drop in interest rate.

With the HELOC I assume once you pay off the portion you borrowed there is no fees/payment associate unless you borrow again right? So theoretically you could borrow the 50k pay it back and then have no additional payment for the next 9 years unless you take out money again.

[sandandsea]

We saved up over a few years to pay cash. I want to pay off my mortgage so I didn’t want to take out another loan. Also knowing how slow we, no.....DH..., makes decisions we ended up with more time to save also. We were able to buy things over time too so it wasn’t $xxxx at once but $x then a month later $x all spread out over 4-5 months.

[aprilsails]

karinothing you are correct that there is no interest associated with a Heloc if you have not withdrawn any funds.

We have a LOC. I’m in Canada so mortgage stuff is a bit different since ours have generally a 5-year period and then you switch lenders.

When we first bought our house in 2011 the bank at that time gave us an automatic 20k Heloc as part of the paperwork. We never touched it because we didn’t need it. When we switched mortgage providers after 5 years that turned into a LOC. When we went to do our first big renovation the rates on the LOC were 0.25% higher than any rate we could obtain on a Heloc with our current mortgage lender. Since we would have had to do a lot of setup fees and have an appraisal done we just borrowed off the LOC. Same thing happened again when we renovated the basement. We never exceeded the 20k limit so we weren’t too worried about it.

When we put down the down payment on our custom build we went through all kinds of nonsense to borrow 50k. Talked to our mortgage lenders about a Heloc and our financial institution and they were all giving us terrible rates and fees, particularly for a 9 month lending period. We went back to the bank where we had the LOC, they said Sure! And I had the 50k cheque the next day. The rate was pretty damn good again. Please note that DH and I have excellent credit and make good money with sound financials so we were not a risk at all for obtaining the Heloc. We just weren’t impressed with the available rates and the fees to set these things up. So I do suggest looking into a LOC with your financial institution. It might be preferable. It always was for us for some unknown reason.

[karinothing]

Thanks aprilsails, I was wondering about a LOC vs HELOC. I am really hoping we can do it without borrowing, but also don't want to wipe out our savings.

I guess lucky for our savings between the kids being home all the time to school being closed and how slammed contractors are right now for work this likely won't happen until 2022. Hopefully by then the cost of lumbar will have gone back down or manufacturing will return to semi normal? Fingers crossed!

[icedcoffee]

Mar 16, 2021 6:48:45 GMT -5 karinothing said:

Thanks aprilsails , I was wondering about a LOC vs HELOC. I am really hoping we can do it without borrowing, but also don't want to wipe out our savings.

I guess lucky for our savings between the kids being home all the time to school being closed and how slammed contractors are right now for work this likely won't happen until 2022. Hopefully by then the cost of lumbar will have gone back down or manufacturing will return to semi normal? Fingers crossed!

I'm wondering this too.  I hope construction materials eventually come back down.  It's not sustainable at current levels, right?  We'd love to eventually do a remodel or 2, but yikes at current prices and timelines!

[karinothing]

Mar 16, 2021 7:58:07 GMT -5 icedcoffee said:

Mar 16, 2021 6:48:45 GMT -5 karinothing said:

Thanks aprilsails , I was wondering about a LOC vs HELOC. I am really hoping we can do it without borrowing, but also don't want to wipe out our savings.

I guess lucky for our savings between the kids being home all the time to school being closed and how slammed contractors are right now for work this likely won't happen until 2022. Hopefully by then the cost of lumbar will have gone back down or manufacturing will return to semi normal? Fingers crossed!

I'm wondering this too.  I hope construction materials eventually come back down.  It's not sustainable at current levels, right?  We'd love to eventually do a remodel or 2, but yikes at current prices and timelines!

Right? I think lumbar is up almost 400%! We are getting a fence and I am going with a company I would rather not go with because they gave us our 2017 prices (we had gotten an estimate with them back in 2017 and decided not to go forward). But no one can even come close to matching the 2017 prices lol .

[icedcoffee]

Mar 16, 2021 8:01:49 GMT -5 karinothing said:

Mar 16, 2021 7:58:07 GMT -5 icedcoffee said:

I'm wondering this too.  I hope construction materials eventually come back down.  It's not sustainable at current levels, right?  We'd love to eventually do a remodel or 2, but yikes at current prices and timelines!

Right? I think lumbar is up almost 400%! We are getting a fence and I am going with a company I would rather not go with because they gave us our 2017 prices (we had gotten an estimate with them back in 2017 and decided not to go forward). But no one can even come close to matching the 2017 prices lol .

It's crazy and I am concerned that it just won't come down.  As long as people keep doing projects even at high prices (which they are--it's insane how much work people are doing right now) I just don't see prices coming down. 

I am SOOOOOO glad we did our Trex deck in 2019 as those prices are now insane.

[karinothing]

Mar 16, 2021 8:12:54 GMT -5 icedcoffee said:

Mar 16, 2021 8:01:49 GMT -5 karinothing said:

Right? I think lumbar is up almost 400%! We are getting a fence and I am going with a company I would rather not go with because they gave us our 2017 prices (we had gotten an estimate with them back in 2017 and decided not to go forward). But no one can even come close to matching the 2017 prices lol .

It's crazy and I am concerned that it just won't come down.  As long as people keep doing projects even at high prices (which they are--it's insane how much work people are doing right now) I just don't see prices coming down. 

I am SOOOOOO glad we did our Trex deck in 2019 as those prices are now insane.

I am honestly surprised so many people are doing inside work because with all of us at home it would be impossible!

[icedcoffee]

Mar 16, 2021 8:15:38 GMT -5 karinothing said:

Mar 16, 2021 8:12:54 GMT -5 icedcoffee said:

It's crazy and I am concerned that it just won't come down.  As long as people keep doing projects even at high prices (which they are--it's insane how much work people are doing right now) I just don't see prices coming down. 

I am SOOOOOO glad we did our Trex deck in 2019 as those prices are now insane.

I am honestly surprised so many people are doing inside work because with all of us at home it would be impossible!

Yes me too.  My kids aren't even home anymore, but hell no to wanting all that going on while I can't escape and the weather is too cold to even open windows to get rid of dust and stuff.  No thanks.

[konapoppy]

Mar 16, 2021 8:19:25 GMT -5 icedcoffee said:

Mar 16, 2021 8:15:38 GMT -5 karinothing said:

I am honestly surprised so many people are doing inside work because with all of us at home it would be impossible!

Yes me too.  My kids aren't even home anymore, but hell no to wanting all that going on while I can't escape and the weather is too cold to even open windows to get rid of dust and stuff.  No thanks.

It isn’t so bad! But we just have a solo contractor, so not as much chaos.

I don’t know if this is standard, but we have ordered all materials direct (our contractor even gives us his discount). I have to plug in how much it will actually cost, but paying for those direct helps a bit.

[karinothing]

Mar 16, 2021 10:50:16 GMT -5 konapoppy said:

Mar 16, 2021 8:19:25 GMT -5 icedcoffee said:

Yes me too.  My kids aren't even home anymore, but hell no to wanting all that going on while I can't escape and the weather is too cold to even open windows to get rid of dust and stuff.  No thanks.

It isn’t so bad! But we just have a solo contractor, so not as much chaos.

I don’t know if this is standard, but we have ordered all materials direct (our contractor even gives us his discount). I have to plug in how much it will actually cost, but paying for those direct helps a bit.

Ha. I think it just depends on the house set up. WE want to re do our kitchen, which is basically the only place left for DS2 and I to work. DS1 in in his room (about 10 feet from the kitchen) and husband is downstairs. I don't think it be possible, oh well. waiting lets up save up more!

[flygirl]

We are paying cash for 1/2 and took out a HEL for the other 1/2. We will pay it off within 5 yrs so I didn’t want to roll it into our main mortgage plus our credit union has no fees and the interest rate is 2.99.

ETA-our contractor told us that his lumber supplier is raising green treat wood prices 40% on May 1.  He had so much work last year even with Covid that he couldn’t even return all the calls he got.