Majority of Consumers Are Planning a Home Improvement Project in the Next Year, Yet Only a Quarter Have Saved the Full Amount
16 Aprile 2019 - 10:00AM
Business Wire
Consumers recognize the financial significance of their home and
want to improve it, however, they appear to underestimate the costs
involved and differ on preferred ways to pay for it. The findings
are part of a new survey from Discover Home Equity Loans.
Nearly all consumers agree on their home’s financial
significance
82 percent of respondents agree that the home they own is a
financial asset, with 47 percent saying the top reason they
purchased their home was that it was a good investment, and 22
percent said that they wanted to start building equity.
Planning for home improvement projects
More than half, 52 percent, of respondents plan to make home
improvements in the next year or sooner, with 25 percent planning a
project within the next three months. Forty percent of people said
they are planning a home improvement project to increase the value
of their home.
Kitchen and bathroom remodels top the list of planned projects
with 37 percent of respondents saying they are planning for each of
those home improvements.
Consumers not clear on the cost and may not have saved
enough
The survey found that 64 percent of respondents think that their
home improvement project will cost under $15,000. According to
Remodeling.net, bathroom remodels can cost between $19,000 and
$61,000 while kitchen remodels can run up to double the price, with
costs ranging from $63,000 to $125,000.1
When asked how much they have saved for their home improvement
project, only 25 percent of respondents said they have enough funds
to cover the entire cost of the project. Twenty-seven percent have
only saved up to a quarter of the total home improvement cost, with
these varying generationally: 27 percent of Millennials, 37 percent
of Gen X and 24 percent of Boomer respondents.
“Home improvement projects can quickly add up and oftentimes
cost more than someone anticipates,” said PK Parekh, senior vice
president of Discover Home Equity Loans. “Which is why people
should be financially prepared and determine which payment method
makes the most sense within their own financial situation.”
Paying for a home improvement project
The survey found a variety of preferred methods for financing
home improvement projects. Thirty-four percent of respondents say
they would prefer to use cash for a home improvement project,
followed by 23 percent saying they would use a credit card.
While forty-six percent of respondents had over $100,000 of
equity in their home that they could tap into to finance a project
only 38 percent said that they are planning to leverage that
equity, whether through a home equity line of credit (18 percent),
home equity loan (13 percent), or a cash-out refinance (seven
percent). Millennials reported being the most open to loans on
their home equity with 20 percent indicating this would be a good
option for them.
“There are a lot of benefits of using a home equity loan to
complete a home improvement project,” said Parekh. “Discover offers
a fixed rate loan with no application or origination fees. Also,
you can use part of your loan to consolidate other existing debt,
possibly reducing your interest rates and giving you just one
monthly payment.”
About Discover
Discover Financial Services (NYSE: DFS) is a direct banking and
payment services company with one of the most recognized brands in
U.S. financial services. Since its inception in 1986, the company
has become one of the largest card issuers in the United States.
The company issues the Discover card, America's cash rewards
pioneer, and offers private student loans, personal loans, home
equity loans, checking and savings accounts and certificates of
deposit through its direct banking business. It operates the
Discover Global Network, comprised of Discover Network, with
millions of merchant and cash access locations; PULSE, one of the
nation's leading ATM/debit networks; and Diners Club International,
a global payments network with acceptance around the world. For
more information, visit www.discover.com/company.
1 https://www.remodeling.hw.net/cost-vs-value/2018/
The Discover Home Equity Loan Survey included 1,203 American
homeowners age 21 and older and was conducted online by Research
Now from September 26, 2018 through October 4, 2018. Survey data is
weighted and is nationally-representative for age, gender and
region. The margin of sampling error was +/-3 percentage points
with a 95 percent level of confidence.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190416005234/en/
Media ContactSarah Grage
SilbermanDiscover224-405-6029sarahgragesilberman@discover.com@Discover_News
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