Is it Better to Finance or Pay Cash for New Jersey Replacement Windows?
You’ve decided it’s time to replace your New Jersey home’s drafty windows with new energy-efficient windows. Good decision! You probably already know that this decision will make your home more comfortable and energy efficient, but how will you pay for these new windows? Will you finance the entire project or will you just write a check or charge it to a card? Following are some financial tips that go hand-in-hand with other decisions you’ll make during the design and installation process for your windows.
Paying Cash: Pros and Cons
The National Association of Home Builders (NAHB) website (http://www.nahb.org/) has a short article comparing financing options to paying cash for home improvements like replacement window projects. The NAHB, like many financial experts, states that if you have cash in savings to cover the cost of a large project, paying cash may be the best way to go for you because you’ll avoid any interest charges. But, even if you have the cash for your project in the bank, there are some real financial issues that may make it more attractive to finance. Before you make a final decision, you’ll want to weigh the pros and cons.
Benefits of Paying Cash for Your Replacement Windows
- You avoid paying interest.
- Credit history and FICO scores do not limit your options.
- You start enjoying your return on investment immediately with energy savings. In an upcoming post we’ll show you five ways that replacement windows for your New Jersey home save you money and speed up your Return on Investment.
Disadvantages of Paying Cash for Your Replacement Windows
- Emptying your savings account means you’ll have less cash on hand for emergencies.
- If your money is earning substantial interest, you’ll forfeit the interest income until you build up your account again.
- You might miss out on some tax benefits.
- Before you decide to pay cash for your replacement windows, think about big-ticket items coming up in the near future. Are you planning an extended vacation? Thinking about buying a new car? What about emergencies?
- If you think you might have to resort to using credit cards to pay for expensive items in the near future, consider how that will impact your finances. Credit cards typically have higher interest rates than personal loans. Either way, draining your savings account now could impact your budget in the future.
Financing Pros and Cons
It’s true; financing your replacement window home improvement project usually means your total “cash” outlay will be higher over the long term. How much higher depends on many factors like net savings you get from having lower utility bills, the interest rate you negotiate, and the length of your financing agreement. There are some other things to consider.
- Interest rates are low right now.
- There are many loan options available, including fixed-rate FHA financing and home equity lines. Some loan offers include zero-interest-financing for 12 to 18 months, if you qualify.
- You can take advantage of tax deductions for interest on home improvement loans.
- Adding another monthly payment might strain the family budget and you’ll have less disposable cash from each paycheck.
- Interest rates for home improvement loans vary as much as 5% among financial institutions based on your Beacon score, income to expense ratio, and where you live. You’ll also pay fees like closing costs, mortgage insurance and other fees associated with mortgage-based loan packages.
- Using revolving credit, such as a credit card, typically has much higher interest rates than home improvement loans, sometimes two or three times higher, depending on the type of card, your credit history and credit score. Although you avoid closing costs, the savings is quickly absorbed by higher interest rates.
As you can see, there is a lot to think about when you consider the pros and cons of paying cash versus financing your replacement window project. At Renewal by Andersen of Central New Jersey, we understand your concerns and will work with you to create a payment plan that works for you.
So, Which is Better: Paying Cash or Financing?
As much as 30 percent of lost energy is attributed to poor window design or integrity. Every day you delay your replacement window project means another day of watching your hard-earned money “float out the window”.
Now that you know some of the most common benefits and disadvantages of paying cash and financing, it’s time to crunch the numbers and see which option is best for you and your family. Renewal by Andersen of Central New Jersey consultants are here to help you find the most beneficial solution for your budget so you can get started right away.
Call Renewal by Andersen of New Jersey for a Free Replacement Window Design Consultation
Call us at 1-888-826-2451 and ask to speak to a financing specialist. Don’t have time to chat right now? No problem. Just fill in the short form at the top of the page and ask for more information about our current promotions and financing options. We’ll get back to you right away with details to help make your decision easier.