Should you borrow to renovate?

With interest rates likely to remain low, some homeowners
see borrowed cash as a means to kick-start a major home
improvement. Yet many critics blame easy credit as the cause
of unreasonable consumer debt. If you’re thinking of securing
a loan to improve your home – even at a very low interest
rate – you should consider the following advice to ensure
you do not put yourself at unreasonable financial risk:

• Do not rely on renovations to immediately improve the
resale value of your home.

• Look into alternative means of financing, so that you do not
use your home as collateral for a renovation loan.

• Budget the pace of your payments to contractors,
keeping track of progress (including performance
guarantees and contract obligations) so that you are
not paying out borrowed money for work that is not
yet completed.

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