Is it better to finance all the remodeling or pay cash from a savings account?

Question from reader: Is it better to finance all the remodeling or pay cash from a savings account?

Answer from Jeanette Joy Fisher

Funding source for remodeling expense all depends on your situation, personal finances, and goals.

Home sellers who need to make repairs and remodel to get their home ready to sell want to consider their credit consequences. For instance, a home seller who desires to purchase another home right away would not want to jeopardize their credit score or financing abilities by charging up their credit cards.

If you have plenty of room on your credit cards to pay for improvements, it might be best to keep your savings intact if you won't receive a large payout from selling your home. Even if you don't use all the cash for a down payment, cash reserves in the bank make mortgage financing easier. However, if you go over the 50 percent proportional amount owed on your credit cards, you can lower your credit score at a time that you need it most. Credit balances with less than 30 percent of available credit used boost credit scores. If you will receive a large check at closing, using savings to pay for remodeling would keep your credit in shape and you will have funds for your new home.

If you want to upgrade your home to sell it, make a plan of changes that make a difference in your bottom line. Paying $30,000 to remodel a kitchen might not give you that much more in a sale. But, a new coat of paint, a new faucet, and hardware for under $500 might add $5,000 to your sales price. Explore the changes you need to make that will help sell your home fast.


These replacement kitchen cabinets, off the shelf at Lowes, cost less than $300. They were painted a lighter shade of green than the bottom cabinets.

Prepare your home for sale without spending extra money.

Copyright © 2006 Jeanette J. Fisher