Other Loan Options

Credit Unions are full-scale lenders, offering traditional loan programs at the most competitive rates and terms.

• HELOC (Home Equity Line of Credit)
• Fixed Home Equity Loan
• Cash-Out Refinancing

Borrowers tackling larger size home improvement project, requiring more than $25,000, have ability to work with the Credit Union Loan Officer to adjust loan structure, one that includes Payclipper program and layer on top the best equity loan to fund the difference.

Here's a breakdown of the pros and cons of using Payclipper unsecured loan*, HELOC, Home Equity Loan, or Cash-Out Refinance for funding home improvement projects, along with tips to consider for each option:

Payclipper Home Upgrade Loan

An unsecured loan* is based on your creditworthiness, without needing to use property as collateral.

Pros

• No Collateral Required: Doesn’t put your home at risk.
• Fast Approval & Funding: Often processed quickly with minimal paperwork.
• Fixed Rate: Loan comes with fixed interest rate, making payments predictable.

Cons

• Limited Loan Amounts: Amount is generally smaller than secured loans, which may not cover large projects (up to $25,000)
• Shorter Terms: Shorter repayment periods can mean higher monthly payments (up to 4 Years)

HELOC (Home Equity Line of Credit)

A HELOC is a revolving credit line based on your home's equity, which you can draw from as needed during a set period.

Pros

• Flexible Access to Funds: Withdraw funds as needed over the draw period, ideal for ongoing projects.
• Only Pay Interest on Amount Used: Helps keep interest costs down if you don't use the full line of credit.
• Potentially Lower Rates: Generally lower rates than unsecured loans, as it's backed by home equity.

Cons

• Variable Interest Rates: Monthly payments can vary, depending on interest rate changes.
• Risk of Foreclosure: Your home is collateral, so missing payments can lead to foreclosure.
• Complex Terms and Fees: May include closing costs, annual fees, or early termination fees.

Home Equity Loan

A home equity loan provides a lump sum of money based on your home's equity, often at a fixed interest rate.

Pros

• Fixed Interest Rates: Predictable payments over the life of the loan.
• Larger Loan Amounts: Allows for bigger projects as it's tied to your home equity.
• Lower Interest Rates: Generally lower than unsecured loans due to collateral.

Cons

• Risk of Foreclosure: Failure to pay can result in losing your home.
• Potential Closing Costs: May involve significant upfront costs, similar to a mortgage.
• Fixed Lump Sum: Less flexibility, as funds are disbursed all at once

Cash-Out Refinance

A cash-out refinance replaces your existing mortgage with a new, larger loan, letting you take the difference in cash based on your equity.

Pros

• Potentially Lower Mortgage Rate: If rates are lower than your current mortgage, you may save on interest.
• Larger Funding Amounts: Offers access to larger amounts due to equity-based lending.
• Single Payment: Consolidates debt into one mortgage payment, which can simplify finances.

Cons

• Extends Mortgage Term: Could restart a 15- or 30-year term, which may cost more long-term.
• Risk of Foreclosure: Like other home equity loans, defaulting risks foreclosure.
• Potentially Higher Monthly Payment: If interest rates or loan amounts increase significantly, so can the monthly payment.

Each option has unique pros and cons depending on your creditworthiness, financial stability, project scope, and comfort level with using home equity. For larger projects, using home equity could provide the best rates while Payclipper Loan might be better suited for smaller, quicker home improvements.