Homeowner Financing of Remodeling Projects

Given the spike in remodeling activity, it’s a good idea for contractors to better understand how homeowners pay for these jobs. To help shed some light on financing practices for homeowner remodels, the National Association of the Remodeling Industry research panel weighed in during the NARI 3rd quarter review of market conditions. The research panel is made up of contractors from all over the United States.

The NARI regularly monitors the state of the remodeling industry by conducting quarterly research to help educate clients, lawmakers, and code enforcement professionals with reliable and credible data about the industry. According to the most recent research, 30 percent of the NARI-member contractors reported that it is “either easy or very easy” for homeowners to get financing for a remodel, with the majority of contractors rating the process as “neutral” to “difficult.”

Resondents reported three major problems that homeowners face when getting financing for their remodel. 38% reported that the financing companies were being overly cautious. 27% reported that the desired project was far too expensive relative to the home’s value. 11% reported that a poor credit history prevents homeowners from getting the needed financing. 72% responded that banks and credit unions were identified as the predominant financing resource for homeowners who were not paying by cash or check. Only 20% reported homeowners using a credit card to finance the job.

According to previous research, about 96% of NARI mebmer contractors accept checks as a form of payment. 25% accept credit cards, cash, home improvement loans, or home equity loans. 6% of contractors arrange financing for homeowners who wish to secure their services.

The NARI Remodeling Business Pulse data projects strong grown throughout Q3 & Q4 of this year, with a growth rating of 6.41. This edges above the Q2 rating of 6.07 that was reported in March. Homeowners who want to remodel their homes are encouraged to seek out NARI members to perform the work. The NARI is a clearinghouse for those seeking to hire ethical, honest, responsible home remodeling contractors who have high standards and strong track records with satisfied customers.

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