OnPath Credit Union

Whether it’s completely redoing your kitchen, installing a pool or adding a bedroom, large-scale renovation projects are inevitably pricey.

The good news is getting financing for a home renovation project is straightforward if you work with the right lender. Loans are not singular in form. There are a truly diverse array of potential borrowing options to choose from, each with their own benefits and drawbacks.

Choosing the right one for your situation may seem complicated at first glance, but there often is a clear best choice for each borrower based on their financial situation, financing needs and credit rating.

• A HELOC might be the best choice for a borrower who knows they need to renovate but aren’t sure how far they might go with the process or how expensive the project will be when finished.
• A home equity loan could be the ideal solution if you know how much you’ll need and require a lump sum up front.
• Using credit cards might be the best financing choice if the scale of your project is on the small side and you don’t want to or can’t access your home equity.

While we can’t tell you which loan option is best for you without knowing your situation or renovation plans, we can help explain some of the variables that should guide your decision. We’re also confident in asserting that, for the majority of New Orleans homeowners, working with OnPath Federal Credit Union for financing is very likely your best option.

There are compelling reasons to bank with a credit union in general, but especially when it comes to home renovation financing.

Your Home Renovation Borrowing Options

Home Equity Loans

The main problem with home equity is its illiquidity. Without getting a home equity loan or HELOC, the most straightforward way to access your equity is to sell your home.

A home equity loan allows you to turn that equity into cash you can spend without selling your house. Home equity loans are sometimes called “second mortgages” because they share many of the same characteristics. The main difference is the money you borrow is transferred to you – not the home seller. Terms and rates are often similar to mortgage options, and your home still functions as collateral.

There are meaningful differences between rates and terms lenders offer on home equity loans. One of the benefits of banking with a credit union are the perks you’re entitled to as a member. Having access to great rates on things like home equity loans is one of those perks.

Home Equity Line of Credit (HELOC)

HELOCs allow you to access your home equity as well, but the structure of this borrowing option is quite different from a traditional home equity loan. Instead of receiving a lump sum, you'll have a credit line you can draw from as needed. You will be issued a card (like a debit or credit card) with the borrowing limit being the equity you’re approved to access by the lender. Like a credit card, you can pay off what you borrow as you go to restore your borrowing limit.

There are several benefits to having this open line of credit. Maybe most significantly, it saves some borrowers money on interest, since you will only be charged interest on the money you use and not your overall borrowing limit. This is markedly different from a home equity loan, where you’re charged interest on the full amount of the loan on day one.

The flexibility of a HELOC is particularly beneficial for ongoing or phased renovation projects, especially if you’re not sure how far you will go with the renovations or if there are questions about the ultimate cost of the project.

Mortgage Refinancing

Another way to access equity is home loan refinancing. This is different from a home equity loan that runs concurrently with your existing mortgage. Instead of having two loans to pay off, you can refinance your existing mortgage and pull out equity.

The benefit is you will still only have one mortgage payment every month. Some borrowers may even be able to get a better rate than they qualified for when they initially took out their mortgage years or decades earlier.

Personal Loans and Credit Cards

Alternatively, you can make home renovations without accessing your home equity at all. There are a variety of personal loan and credit card options available from OnPath FCU for New Orleans borrowers who don’t want to or can’t access the equity in their home. You may also qualify for a personal loan secured with your home, a vehicle or other assets.

Get the Best Home Renovation Borrowing Option for Your Needs

Whether you want home renovations to prepare your home for listing or you’re just tired of your dated kitchen, flooring or bathrooms, OnPath Federal Credit Union can help. We offer exceptional borrowing options with competitive rates to Louisiana borrowers. Call us at 800.749.6193 to speak with a loan specialist about your options.