People living in New Jersey and the metropolitan New York area who plan to invest in replacement windows may wonder which is better for them: paying cash or financing. There are some valid arguments for both options. The Renewal by Andersen of New Jersey and New York Metro staff did some research, and here is what we found.
Every homeowner dealing with windows that leak air and moisture is probably spending more than they have to on energy costs. Here are two quick facts from Energy.gov.
Financing makes sense if you have excellent credit, equity in your home, or a credit card company willing to advance you funds at zero interest for 12-24 months.
This might be the best replacement window project payment solution if you plan to start immediately.
The Fed is gradually increasing the interest rate, with an adjustment every few months as the economy improves. Right now, personal credit lines have interest rates from 4.29 percent all the way up to 25 percent, and are primarily dependent on credit scores and debt to income ratios.
For those who plan to do a major home renovation any time soon, it’s a great time to apply for a home equity loan. The current average interest rate on a HELOC as of December 14, 2018 was5.56 percent. There are still a few lenders offering 3.87 – 5.0 percent.
Borrowing $10,000 from your bank with a HELOC 10-year repayment plan at 5.56 percent, your total interest would be $2,977.51, or roughly $297.51 per year. You could apply the money you save every month on heating and cooling costs to reduce the total interest. Using this option, you’ll save money, have a more comfortable home, and increase the property resale value!
Use this option cautiously. If you can’t pay off the zero interest advance in the established window, interest rates will jump to your normal rate, which depends on your credit score and payment history, and the company could apply penalties.
For this discussion, assume you have $10,000 in a certificate of deposit nearing maturity, and you aren’t sure whether you want to roll over the CD, or use the available funds to pay cash for your replacement window upgrade.
As of December 2018, the average certificate of deposit interest rate for two popular terms (24-month and48-month) is between 0.79 percent and 1.03 percent from a brick-and-mortar bank. Online rates range from .59 percent for six-month CDs up to 3.15 percent for 5-year term instruments.
The best-case scenario means you could lock up your money for five years and earn $335.48 per year. Worse-case scenario has you earning about $60 per year – both of these figures are much higher than the national average which is currently $35.43 – $189.89 per year.
Paying cash means you could get a higher,immediate return on your investment by saving money month after month with lower bills.
You know your financial status better than anyone. If you need help deciding, ask a Renewal by Andersen of New Jersey and New York Metro replacement window specialist to help you run the numbers. Just fill in the short form on this page or give us a call at (866) 609-5033 to schedule a private, in-home consultation.
