BUSINESS + ECONOMY

Should you take on debt for home repairs?

May 29, 2024, 5:00 PM

The housing market in Utah is competitive and shows minimal signs of slowing....

The housing market in Utah never seems to slow down. (Photo credit: Dustin Chambers/Bloomberg/Getty Images/FILE)

(Photo credit: Dustin Chambers/Bloomberg/Getty Images/FILE)

SALT LAKE CITY — Expect the unexpected when it comes to home repairs. According to Bankrate, almost 20% of homeowners say they’ve taken on debt for maintenance and surprise costs. A national economic analyst stresses the significance of saving instead of borrowing when possible.

The survey also found 24% of homeowners say they have set aside money for the inevitable repairs.

About 1 in 5 homeowners say they’ve taken on debt for maintenance and surprise costs: Is it a good idea?

Debbie and guest host Taylor Morgan speak with Mark Hamrick, who is Bankrate’s chief economic analyst, about the pros and cons of taking on debt for home repairs, renovations and maintenance.

In today’s high-interest environment, people tend to focus on the downside, Hamrick said.

A well-qualified new user will see an average credit-card interest rate of about 20.6%, he said. But the upside is the superior return on savings: Money-market accounts and high-yield savings accounts return about 4% to 5%, he added.

Don’t go into home ownership blind. Home repairs and maintenance are inevitable, Hamrick said, adding a line of credit is far better than taking on credit-card debt when it comes to home upkeep and emergencies, such as a leaky roof.

Save for emergencies and repairs at home

“I would much rather have people focus on savings — emergency savings, rainy-day fund, any variation on those themes — rather than taking a liability — replacing an asset with a liability, which is half the equity in your home,” Hamrick advised.

He cited a Federal Reserve survey that found only 43% of Americans can pay an emergency expense of $1,000 or more from savings. The survey also discovered:

Sixty-three percent of adults said they would cover a hypothetical $400 emergency expense
exclusively using cash or its equivalent, unchanged from 2022 but down from a high of 68 percent in
2021.”

“What I would say is that I have yet to meet anyone who said they saved too much money. If you get to that position, then you can consider splurging or put it to another purpose — taking a vacation or whatever — but I would just say saving more is better than not saving at all,” Hamrick said.

The average interest rate today on a Home Equity Line of Credit (HELOC) is between 7% and 9% on an annual basis, he pointed out. 

“That’s high because we’re in a high interest-rate environment. So, you are taking on more debt, and if you run into trouble down the road, that is going to only create another problem that you need to solve. So this is why saving is just such the better solution,” Hamrick said.

Related:

Why water property taxes are going up in Salt Lake City and Sandy

Dave & Dujanovic can be heard weekdays from 9 a.m. to noon. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app, as well as Apple Podcasts and Google Play.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Business + Economy

On July of 2024, The Sundance Institute is bringing back to Utah the Sundance Film Festival films w...

Esme Sanchez Estevez

Free Sundance summer screenings return to Utah

Free Sundance Film summer screenings will be held in Park City, Salt Lake City, and West Valley City. 

2 days ago

Incumbent Gov. Spencer Cox, left, shakes hands with Utah Rep. Phil Lyman after Utah’s gubernatori...

Andrew Gordon

Cost of 2034 Olympic games addressed by Utah’s GOP gubernatorial candidates in debate

The 2034 Winter Olympic Games could cost around $4 billion, but there is a hope it won't cost Utah taxpayers anything.

2 days ago

Johnson & Johnson brand baby powder, one of several products at the center of lawsuits against the ...

Kyle Remund

State of Utah reaches settlement with Johnson & Johnson

Johnson & Johnson will be giving Utah and many other states a massive payout due to deceptive marketing practices for talc-based products.

2 days ago

Customers wait in line for Starbucks, the chain just announced new value meal options...

Mariah Maynes

Starbucks joins value meal race with new ‘Pairings’ options

Like its competitors, Starbucks is adding a value meal to boost sales. The coffee chain is calling them "Pairings."

3 days ago

FILE: A TRAX vehicle wrapped in Olympic imagery during a visit of the International Olympic Committ...

Tammy Kikuchi

Organizers reveal 2034 Olympics budget, total comes in slightly less than 2002

Utah hopes to be named as the host city for the 2034 games, and budget planning is already underway.

5 days ago

An employer and employee shaking hands. Jobs accelerated in May, but is that a good or bad thing?...

Kennedy Camarena

Jobs accelerated in May; why that’s a bad thing

Jobs have accelerated for the month of May. While most think that is a good thing, there might be a reason it isn't.

8 days ago

Sponsored Articles

Underwater shot of the fisherman holding the fish...

Bear Lake Convention and Visitors Bureau

Your Bear Lake fishing guide

Bear Lake offers year-round fishing opportunities. By preparing ahead of time, you might go home with a big catch!

A group of people cut a purple ribbon...

Comcast

Comcast announces major fiber network expansion in Utah

Comcast's commitment to delivering extensive coverage signifies a monumental leap toward a digitally empowered future for Utahns.

a doctor putting her hand on the chest of her patient...

Intermountain Health

Intermountain nurse-midwives launch new gynecology access clinic

An access clinic launched by Intermountain nurse-midwives provides women with comprehensive gynecology care.

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

a person dressed up as a nordic viking in a dragon boat resembling the bear lake monster...

Bear Lake Convention and Visitors Bureau

The Legend of the Bear Lake Monster

The Bear Lake monster has captivated people in the region for centuries, with tales that range from the believable to the bizarre.

...

Live Nation Concerts

All the artists coming to Utah First Credit Union Amphitheatre (formerly USANA Amp) this summer

Summer concerts are more than just entertainment; they’re a celebration of life, love, and connection.

Should you take on debt for home repairs?