Bringing home improvement financing into the 21st century

Bringing home improvement financing into the 21st century

“Home improvement.” What comes to your mind when you hear those words?

You may think of selecting the right kitchen cabinets or bathroom tiles. Perhaps you remember when your parents expanded their master bedroom. You also could be an HGTV-lover, and the hours enjoying Fixer Upper spring to your mind.

We also think of these things.

But after speaking with dozens of homeowners over the past several months, we’ve realized that America’s love for home improvement is about far more than aesthetic appeal.

We’ve learned that home improvement is a key piece of the American Dream.

Through working hard and playing by the rules, you can own a house that you’re proud to call your home. No wonder our 2017 State of the American Dream report found that, of homeowners who want to achieve the American Dream, 79% think renovations are a big piece.

The financial system has an important role to play in this dream. Paying for a remodel is a big deal–home improvement projects can range from a couple hundred to a couple hundred thousand dollars.

When a family turns to a bank to finance a remodel, they deserve to be given honest advice on how to save money, transparency into interest rates and fees, and most important, they deserve to be told when to wait and save cash.

Conversations with homeowners across America have revealed a somber reality: our financial institutions are failing to fulfill their duty.

Instead of getting transparency, several homeowners told us they couldn’t get straight answers on interest or fees from their banks. Half of millennials are hesitant or anxious to get a home improvement loan from a bank–a trend we observed across generations.

Instead of receiving honest financial advice, homeowners find themselves trapped with too much debt. Our 2017 survey found that 21% of Americans view consumer debt as the biggest threat to the American Dream; this was the most picked option. This is in large part because homeowners don’t have the tools or background to evaluate financial options and compare them against each other.

Instead of being told how to keep money in their wallets, many homeowners remain unaware of the many ways to save money and discover alternative financing options for a renovation.

And we challenge you to name a financial institution that would tell a potential customer not to use one of its products, but instead to wait and save cash.

Of course, consumers bear some responsibility for finding savings and making educated decisions about home renovations.

But personal responsibility only gets you so far when there’s a vast knowledge gap between homeowners and financial institutions that specialize in shrouding themselves in mystery.

Homeowners need a trusted ally during their renovations to find them savings and close the information gap between consumers and the financial institutions.

People tend to turn to family or friends for this advice. But many of these people also don’t have enough financial knowledge.

An effective solution to empowering consumers during home renovations needs to have two qualities. It has to be personalized to each household, and it has to be affordable so consumers can educate themselves without breaking the bank. No solution to date has fulfilled both conditions–although there has been progress in each category.

Personal financial planners have grown in popularity, but although they tend to give targeted advice, these planners can be unaffordable for the Americans who need advice most.

The spread of free online content has helped solve the affordability problem while educating consumers, but many consumers told us they don’t have a “single source of truth” to go to online. And of course, an online article can’t be personalized to a household’s unique conditions.

We’ve found a solution that incorporates the best of each approach.

Hearth is building technology that uses information about a consumer’s home and financial situation to find savings and give personalized recommendations about paying for a renovation.

To make the technology as helpful as possible, our engineers are working closely with personal finance experts, home improvement professionals, and homeowners. And to solve the affordability problem, we’re going to make our service free for every consumer.

Our product won’t solve every financial problem consumers face when improving their homes. At the end of the day, homeowners will still have to ensure they’re responsibly managing their finances.

But the American Dream doesn’t function if, even through hard work and playing by the rules, homeowners fall into debt and away from their dream homes during a remodel because of a financial system built to serve its own interests.

We believe that, armed with the right tools during their renovations, homeowners can navigate a financial system that has grown extremely complex over time.

We believe that, with the right advice, homeowners will make the smart decisions needed to responsibly achieve the American Dream of living in not just a house, but the right home.

That belief drives us as a company.

Are you in?

Email to work with us.