Whether you’ve just purchased a fixer-upper or want to update your existing home, home improvement projects can really add up – even small ones. For example, the average kitchen remodel costs around $25,000, according to Home Advisor. Even simply painting walls, installing new backsplashes, and upgrading sinks and faucets can cost between $10,000 to $15,000.
Remodeling is costly and not everyone has the funds to pay in full. You certainly don’t want to put these expenses on a credit card, especially if they have high interest rates. This is where personal loans and Home Equity Lines of Credit come in.
Home Equity Line of Credit for Home Improvement
If you own your home and have a substantial amount of equity, a HELOC is an option. With a HELOC, you may be approved for up to 90% of the value of your home, less any first mortgage balance owed. Once approved, you will have a draw period of 8 years meaning you can continue to use the loan like a line of credit for that term. At 8 years, the draw period closes and becomes a 15 year variable-rate mortgage. This is considered the repayment period. HELOCs will usually have lower rates than personal loans.
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Personal Loan for Home Improvement
Another option for funding your home improvement projects is with a personal loan. Personal loans only require basic documentation to verify your identity and income so they’re generally faster to obtain, especially if you have good credit. Personal loans typically have higher interest rates than Home Equity Lines of Credit.
Which Option is Right for You?
At the end of the day, both Home Equity Lines of Credit and personal loans are great options for your home improvement projects. Whichever you decide, take your time, compare your options and consider the following:
- How much equity you have in your home
- How much you need to borrow
- Your credit score
- If you’re willing to put your home up as collateral
If you have any questions, feel free to contact People’s Community Federal Credit Union.
Ready to apply for a loan? We have loans to fit your needs, including personal loans and Home Equity Lines of Credit.
Personal Loan or HELOC for Home Improvement in Vancouver WA
Serving Greater Vancouver WA