Owning a home is a big responsibility. However, it’s a rewarding one. But when unexpected expenses arise, that doesn’t make the situation any less stressful. One of the most common large expenses that homeowners face from time to time is the need to purchase a new furnace and have it installed. If it comes as a result of an existing furnace breaking down, it means the homeowner needs to spend anywhere from $4,000 to $10,000 to solve the problem on very short notice.
When you consider that the average American’s savings account holds only $4,500, that represents a big problem. That’s why we here at HB Home Service Team often field calls from Randallstown, MD homeowners asking us whether it’s possible to finance the purchase and installation of a new furnace. Fortunately, the answer is yes. Moreover, there’s a variety of ways to do it. Here’s everything you need to know about your new furnace financing options.
A Personal Loan
Depending on the state of your finances, and the amount of money you need to purchase and install a new furnace, you could use a personal loan to do it. The best part about this option is that it’s simple. There’s no requirement that you explain to the lender what you need the money for, and as long as your credit history demonstrates that you’re not too much of a risk, you’ll get a loan. And, if your furnace breaks down in the middle of winter, a personal loan may be one of the fastest ways for you to raise the needed funds. In fact, some lenders can approve your loan and get the funds to you within a single day.
FHA Home Improvement Loans
Although not too many people know it, the Federal Housing Administration (FHA) offers guaranteed loans to homeowners for things other than an initial home purchase. A case in point is the FHA’s Title 1 loan program. Title 1 loans are specifically meant for homeowners to finance home improvement projects, including major renovations and repairs. That includes purchasing and installing major systems like furnaces and other HVAC equipment.
FHA Type 1 loans work especially well for new homeowners or anyone who doesn’t have enough equity in their home to get a home equity loan or line of credit. In most cases, all you’d need to qualify for one is a solid credit history and sufficient income. And, since FHA Title 1 loans have feature repayment terms ranging from six months to 20 years, they’re a great option for homeowners with virtually any budget.
FHA PowerSaver Loans
The FHA also offers another great loan program that can help homeowners to finance the purchase and installation of a new furnace. It’s called the PowerSaver Loan program. It’s a program designed to encourage homeowners to upgrade their homes to include things like solar power and high-efficiency appliances. Using the program, it’s possible to finance a new furnace as long as it represents an efficiency upgrade compared to the unit it replaces. In that case, the FHA will help you finance up to $7,500 in the form of an unsecured loan.
If your new furnace and its installation will cost more than that, the PowerSaver program offers another option. It will allow you to take out a second mortgage on your home worth up to $25,000. In both cases, however, you’ll need good credit and a manageable existing debt level to qualify. With the extra funding, you could even opt to replace your furnace with a high-performance heat pump that will save you on operating costs. Then you could use the savings generated to help you pay down the mortgage even faster than you otherwise could.
Home Equity Loans or Lines of Credit
If you’ve paid a significant part of your mortgage off or own your home outright, a home equity loan or home equity line of credit (HELOC) can offer an excellent way to finance a new furnace. Such arrangements typically come with lower interest rates than unsecured loans, since you’re borrowing against the equity you’ve built up in your home. Plus, most home equity loans and HELOCs are tax deductible since they represent qualifying investments in your home. That helps to defray some of the costs of the loan itself, making home equity loans or HELOCs a fantastic way to finance a new furnace for your home.
Of course, if you’re unable to avail yourself of any of the options above, you could always use a credit card to finance your new furnace. However, the high interest rates that come with credit cards should make this your option of last resort. If you find yourself needing to use a credit card to finance your home’s new furnace, you should do your best to develop a plan to pay down the debt before you take it on. Otherwise, your furnace could end up costing you far more than it should in the long run.
You should also check with your credit card providers to see if any of them offer preferential loan terms to existing cardholders. Some credit card companies will allow you to take out a loan against your existing credit line at a much lower interest rate than if you were to use the card itself. In exchange, you must commit to specific monthly payments, much like a standard personal loan. If one of your credit cards allows for this arrangement, it may help you to finance your home’s new furnace for much less than simply placing the purchase on your card.
Talk to Us About Financing Options
If your home needs a new furnace and you need to finance its purchase and installation, give the team here at HB Home Service Team a call. We work with some fantastic preferred lenders that offer a variety of financing options for homeowners like you. In many cases, they may be able to help you to navigate the process of your available FHA loan options. And failing that, they can set you up with a loan or line of credit, depending on your financial circumstances. Remember, we’ve chosen our preferred lenders based on their ability to serve you, our customer. So, we’re certain that they won’t rest until they’ve found you a finance option that meets your needs.
Then, the expert HB Home Service Team HVAC team will get your new furnace installed in your home and have you back to living in perfect comfort in no time. Afterward, we can offer you complete maintenance and repair services to protect your new investment throughout your new furnace’s lifetime. Also, we offer quality plumbing services, including handling your water heater, water softener, and well pump needs. In other words, we’ll be your go-to home services team, helping you to keep every major system in your home running just as it should.
So, if your home needs a new furnace, or will soon need one, contact the experts here at HB Home Service Team right away!