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Americans spend over $600 billion per year (1) on remodeling their homes. Upgrading and repairing your place can protect its market value and make your living space more comfortable.

But it can also be expensive, and figuring out a way to pay for it isn't always straightforward.

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Let's pretend, for example, that Bethan needs to make some major repairs to her home that cost around $25,000. She has a $27,000 emergency fund, but she's not sure if she should wipe out her rainy day account or finance the fixes.

So, what's Bethan's best move?

Since Bethan has her emergency money just sitting there ready to go, there's an obvious case to be made that she should spend it on the repairs.

"You have an emergency account for emergencies," Melanie Musson (2), a finance expert with Quote.com told Moneywise. "So, if your home needs emergency repairs, you can argue that it's appropriate to use your emergency fund to cover them."

Musson explained that, "in general, it's better to pay for things with cash than to take out a loan."

Pierre-Antoine Beugnot, founder of MoneyCrunchLab (3), agreed.

"A high-interest loan rarely makes sense just to keep low-yield savings untouched," he said.

If Bethan's emergency fund is in a savings account earning 2% (4) and she'd have to borrow at a rate of around 7.5% (5), the math points clearly towards spending the cash.

Unfortunately, there's also a clear downside to draining her emergency fund.

"If withdrawing $25,000 would empty your account, you should consider other options," Musson added.

Chloe Shubin (6), VP of Operations and Strategy at Griffin Funding, agreed.

"Dipping into emergency savings for a $25,000 repair puts a homeowner in financial danger as soon as the next surprise shows up," Shubin told Moneywise. "And the next surprise probably won't be too far away if you own an older home."

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Burning through your entire emergency fund to cover one repair may solve today's problem, but it could create an even bigger one tomorrow. As Musson and Shubin point out, draining your savings leaves you exposed to the next unexpected expense — whether that's another plumbing issue, a medical bill or a job loss. Without that financial cushion, many homeowners end up relying on high-interest credit cards or personal loans just to stay afloat.

Instead, it can make sense to keep your emergency savings intact while letting it continue to earn interest. Or, you could pay for some of the total repair cost with your funds and take out a loan for the rest so you don't tap out your fund completely.

Either way, parking your cash in a high-yield savings account means your money remains accessible when you need it, while quietly growing in the background instead of sitting idle.

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That's 10 times the national deposit savings rate, according to the FDIC's July report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.

Schubin suggested that a home equity loan or line of credit could both be good options. A home equity loan, which provides a lump sum upfront, may be the better choice if Bethan knows the total costs of her project, while a HELOC that offers access to a flexible line of credit would work best if Bethan is uncertain of the final price.

"If you have plenty of equity in the home, you can borrow against it at a rate that will probably be lower than a personal loan or credit card," Schubin said. "And interest might be tax-deductible (7) if you use the money to improve your home."

Schubin said she would "only consider using savings instead if you have little equity, an emergency fund much larger than the cost of the repair, and interest rates are high."

If you're leaning toward borrowing instead of draining your savings, a HELOC can offer a balance of flexibility and financial breathing room. Unlike a traditional home equity loan that gives you one lump sum, a HELOC lets you borrow only what you need, when you need it.

You can tap into your home equity with a HELOC from AmeriSave and access your full funds right at closing.

You can choose a draw period that fits your life — three, five, or 10 years — along with 20- or 30-year terms to suit your budget. And with a 10-year interest-only option, you can keep monthly payments manageable while you plan ahead.

It's essentially a flexible credit line secured by your home, delivered through a mostly online application process. Just make sure you understand how the repayment process works.

Ultimately, Bethan's best option may be a mix of both of these suggestions.

"It's not an all-or-nothing decision; you could take $15,000 out of your account, keep $10,000 for emergency expenses, and take out a loan for the remaining $10,000 for your home repair," Musson said.

Musson also suggested that Bethan should check her insurance to see if the repairs are covered.

"If your home sustains damage from a storm, you should be able to file a home insurance claim. Many emergency problems are covered by insurance," she said.

Shopping around for homeowners insurance could help you secure similar coverage at a lower premium. The money you save each month can also be used to gradually rebuild your emergency fund, giving you a stronger financial cushion before the next big repair inevitably arrives.

By using a comparison platform like Insurify, you can instantly view quotes from top-rated providers to ensure you aren't paying a hidden 'loyalty tax' to your current insurer.

Just answer a few basic questions, and Insurify will show you the most affordable deals in as little as three minutes.

Not only is the process 100% free, but you could also save up to 20% by bundling your car and home insurance.

Bethan could also look at her borrowing options, think about how long rebuilding her emergency fund might take and make sure insurance won't pay first. After doing these things, she can make an informed choice about the best way to fund her repairs.

Big financial decisions rarely exist in isolation. Paying for a home repair today could affect your retirement savings, investment strategy or emergency fund for years to come, depending on what resources you need to tap. Before deciding how to fund a major repair, consider consulting a financial advisor who can assess your cash flow, debt obligations and long-term goals.

A qualified financial advisor can help you compare the true costs of using savings versus borrowing and recommend a strategy that aligns with your overall financial plan. They may also identify strategies you hadn't considered, whether that's restructuring your budget, adjusting your investments or finding a more cost-effective way to finance the repair.

Platforms like Advisor.com connect you with a vetted FINRA/SEC-registered advisor near you for free.

Here's how it works: Simply enter a few details about your finances and goals, and Advisor.com will comb through its roster and connect you with a qualified expert best-suited for your needs based on your unique financial goals and preferences.

The platform does the heavy lifting for you, vetting advisors based on track record, client ratios and regulatory background. Plus, their network comprises fiduciaries, who are legally required to act in your best interests.

Even better, Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they're the right fit for you.

— With files from Christy Bieber

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Harvard Joint Center for Housing Studies (1); Quote.com (2); MoneyCrunchLab (3); Experian (4); Experian (5); Griffin Funding (6); IRS (7)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.