Ready to tackle your home improvement to-do list?
Find out if now’s the right time with Summit’s Three-Step Debt Analysis Quiz.
You’ve spent hours on Pinterest and Houzz. Have a stack of magazines that you can barely close for the Post-Its®. And have picked your friends’ brains about color palettes, contractors and countertops.
You are so ready to tackle those home improvement projects!
But can you afford to? Don’t stop now—find out!
Step 1: Review your entire financial picture
Planning a home improvement can be so much fun! Just imagine enjoying your morning coffee in a remodeled kitchen or the thrill of washing clothes in a shiny new laundry room (ok, that might be going a bit too far!). But don’t let the “fun” get in the way of reality: Make sure you can really afford this project before you jump in.
The best way to find out is to sit down with a Summit lending expert. They’ll help you look at upcoming expenses and expected changes to your finances—for instance, if your oldest is about to head off to college or you’re planning to move from full-time to part-time work, you might need to re-evaluate. And if you’ve had a recent hit to your credit rating, you might want to wait until your score is in better shape so you can get the best loan rate possible.
Step 2: Decide which type of loan is right for you
Work with your Summit lending expert to decide whether a conventional or home equity loan is a better fit. A conventional loan gives you a lump sum of money, typically at a specific interest rate and for a specific period of time. A home equity product lets you tap into the value you’ve built up in your home and could have tax benefits (see below).
If you’re considering the home equity route, keep these two things in mind: the stability of the local housing market and the type of improvement you want to make. A stable market and an improvement that adds to the value of your house can be two signs a home equity product is worth considering.
You have two home equity options:
A home equity loan: These are typically used when you have a specific project in mind. Just like a conventional loan, you’ll borrow a lump sum of money, usually at a specific interest rate and for a specific amount of time.
A home equity line of credit (HELOC): This functions like a credit card: a HELOC gives you access to a specific pool of money and can be helpful if you know you might have some home improvement expenses down the road. At Summit you won’t incur any costs unless you actually use the money (some institutions have an annual fee to maintain a HELOC). These can be a better choice if you’re looking for flexibility.
Step 3: Talk to your tax advisor
One reason home equity loans and lines of credit are appealing is because the interest can often be deductible. Schedule an appointment with your tax advisor to find out.
Stop dreaming! Start doing! Contact Summit Credit Union today.
