Remodeling Payment Options You Can Live With

Installing new siding on your home is one of the best ways you can increase the curb appeal and value of your house, which is why it's one of the most popular remodeling projects homeowners undertake. When they decide to contact siding contractors, however, many people worry about how they will pay for such a major project. If you're concerned about whether you can afford new vinyl or fiber cement siding, do some research to determine how much you can afford. You may be pleasantly surprised by the many options now available for home improvements.

Paying Cash Eliminates Monthly Payments

If you have enough money saved up to pay cash for your new siding, you're a step ahead of most families. While cash is a great way to eliminate monthly payments and interest, it does have a down side. If you use most of your savings to finance home improvements, you'll lose that cushion that you've been saving for emergencies such as auto repairs or unexpected medical bills. Weigh the consequences before paying, and don't shell out the entire amount up front.

Home Equity Loans -- New Siding With Revolving Credit

Home equity loans are actually revolving "lines of credit" that fluctuate as you use the money. For instance, if you pay your siding contractors with half of the available line of credit, you can still opt to use the rest of the credit for other improvements or simply keep it open in the event you'll need it down the line. Your house is your collateral for a home equity loan; in general, you can borrow up to 75% of the appraisal value of your house less whatever you owe on your mortgage. Obviously, the longer you've owned your house, the more you can get in your line of credit. The monthly payments are usually based on Prime Rate plus a percentage and are variable with the market.

Home Improvement Loans

The Federal Housing Administration (FHA) currently offers homeowners two low-interest loan options through approved lenders. The Title 1 loan is for remodeling a single-family home and is based partly on your credit report and ability to repay the loan. The Section 203(k) loan lets you use one loan to buy a "fixer-upper" house and renovate it.

Refinancing Your House

If interest rates have dropped considerably since you purchased your house, you can refinance your payments at a lower rate and get some extra cash for new vinyl or fiber cement siding at the same time. Once you've fixed your mortgage at a lower rate, you can use the difference to fund your next remodeling project.

In-House Financing

More siding contractors than ever are offering excellent financing plans to qualified customers, saving homeowners the hassle of applying for a loan and waiting around to get approval. In some cases, you can get up to a year of interest-free investing in your home without a single payment. If you pay within the allotted time frame (usually a year or twelve months), you don't have to pay any interest on the financed amount. If it takes you longer to make the monthly payments, interest will accrue and you may have to pay penalties. This kind of financing is an excellent way to make regular payments without having to pay interest for the first year. If you're confident you can pay off your in-house financing, it's a great way to upgrade your home's siding without tying up your savings or being tied to a bank loan.

It's always best to explore several options before deciding how to pay for renovations. Consider how much the monthly payments will be, what the interest rates are and whether you want to keep a cushion of savings for emergencies before signing on the dotted line. Once you've locked in your financing, your siding contractors can begin the job of transforming your house.