Americans spend over $600 billion per year on remodeling their homes. Upgrading and repairing your home 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.

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.

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So, what's Bethan's best move?

The case for paying cash

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, 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, 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% and she'd have to borrow at a rate of around 7.5%, the math points clearly towards spending the cash.

The case for borrowing

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, 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."

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.