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The Cost of Household Renovations

A new survey from Freedom Debt Relief reveals that 69% of homeowners with $10,000 in unsecured debt plan on renovating their homes in the next five years. 

Additionally, 60% of homeowners said they are unable to afford needed upgrades and are willing to go deeper into debt to fund the renovations. 

The survey states that 73% of homeowners planning renovations will finance the project with a debt-based financial product. Twenty-seven percent plan on paying in cash. 

Of those planning to renovate, 26% said they plan on spending more than $25,000 on renovations over the next five years. An additional 25% will spend between $5,000 and $10,000. Thirty-two percent of millennials plan to spend more than $25,000 on renovations, while Generation X homeowners plan on spending between $5,000 and $10,000. 

Payment options for these renovations vary, but 58% plan on using cash or savings to pay for projects. Also, 29% plan on using a Home Equity Loan, 28% plan on using a credit card, and 36% of millennials plan on using a credit card to fund their projects. 

While homeowners are willing to go further into debt to renovate their home, J.P. Morgan Chase reported that student debt, which has double to $1.5 trillion over the past decade, is the fastest growing household debt. 

“Although the financial returns from a higher education degree over a lifetime typically exceed the costs, roughly 22% of student loan borrowers are in default,” the report said. “As a result, some have framed the ‘student loan crisis’ as a crisis of student loan repayment rather than student loan debt.” 

Among the findings by J.P. Morgan Chase was that the average family pays a median of $179 per month in loans of take-home income in months with positive payments. Nearly a quarter of families spend more than 11% of their income on student loans. 

The study revealed that 44% of homebuyers who earn less than $50,000 annually make positive payments to their loan. That number increases to 52% for those earning between $50,000-$1000, and 63% for borrowers who make more than $100,000.

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.

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