You may have spent weeks, months or even years planning your remodeling project. You’ve invested time gathering ideas, having conversations with family members, creating inspiration boards, and building lists. Today, you are ready to get started! You’re ready to modernize your kitchen or make bathroom improvements. You’ve decided to update your flooring or upgrade your windows and doors. You’re finally going to replace your roof or add that pool. The only question left unanswered is: “How will I pay for the upgrades?”
There are several options available to you when it comes to paying for home improvement projects. The option that will suit you best depends on how much you want to borrow, how good your credit is, and/or how much equity you have built up in your home. Equity is the amount by which your home’s market value exceeds your mortgage balance.
The most popular ways to finance home improvement projects are:
Personal loan: If you don’t have much equity in your home and you want to avoid high-interest cred card debt, personal loans can be a smart choice. Personal loans are not backed by any asset, meaning you are qualified to receive the loan based solely on your ability to pay it back based on your credit history. The interest and payments are fixed so it makes budgeting easier; however, the interest rates are still higher than some other types of loans. Personal loans are great for borrowing smaller amounts of money – $1,00-10,000. You can also get a quick decision and there are no fees for the loan set-up. Rates for personal loans at WesTex are as low as 3.99% depending on the amount you borrow and the terms of repayment. Learn More
| PROS | CONS |
| No collateral required (no risk of losing your home) | Depending on your credit score and length of loan, interest rates can be higher than home equity loans. |
| Quick and easy application process; fast access to money | No tax deduction benefits |
| Usually, no prepayment penalties and better APRs than most credit cards |
Home Equity Loan: Home equity loans are best for larger projects. You can typically borrow up to 80% of the equity in your home. Interest rates on home equity loans are generally significantly lower because they are secured by your home. There can also be some tax benefits with home equity loans. If you can show you spent the money to improve your home, you may be able to write off the interest on the loan on our tax return. Getting a home equity loan does require a bit more work, as you’ll have to provide documentation before closing; additionally, home equity loans do require some closing costs but those costs can usually be rolled up into the loan. Current rates range from 3.75-4.75% with terms from 60 to 180 months, with a minimum borrowed amount of $20K. You’ll also want to note that sometimes it takes a bit longer for these types of loans to be funded. Texas law requires a minimum 12 calendar day waiting period from the time the written application and the Texas Home Equity Loan Disclosures are received to the day you can close. There is also an additional three business day Right of Rescission period before the loan can be funded, which is required by both state and federal laws. With the required waiting periods, the minimum time it will take to receive your money is 15 days, but this will depend on processing time and weekend or holiday schedules. Learn More
| PROS | CONS |
| Lower interest rates compared to personal loans | Secured by your home; if you default on your loan, you could lose your home. |
| Tax deduction benefits | Lengthy application process more required documentation, applicable closing fees. |
| Can borrow larger sums if equity is available | Required Right of Rescission period before loan can be funded |
Credit Card: Using a credit cards gives you ease of use and convenience. WesTex Federal Credit Union offers a MasterCard with 13.99% interest. If you decide to use a card, you’ll want to make sure you pay off your balance in a short period of time, because interest rates are higher and neglecting to have a payoff plan can be detrimental. Putting expensive home improvement or repair costs on a credit card is not the best choice if you know it will take you several months or years to pay those in full. Learn More
Share Secured Loan: If you already have some money saved up, but want or need to keep your savings intact, or need a way to build your credit, a share secured loan may be for you. The perks are that interest rates are very low. However, while you’re paying back the loan, the amount you borrowed will be frozen. This means you cannot withdraw or use this money until the loan is paid back in full. So, if you’re unable to get a loan for a specific purpose, want to build credit, don’t want to touch your savings, and want quick access to funds be sure to explore share secured loan options at WesTex. Learn More
Save up and pay cash: WesTex savings accounts are an easy way to stash away some cash. We can help you to set up direct deposits so that you are saving regularly and building up the ability to pay for your dream project.
Whatever way you choose to fund your home improvement project, WesTex is here to help you get the money you need to make your dreams come to life!