Financing Your New Window Replacement
Whether you live in an older home that needs renovating or you just want to improve your home’s energy efficiency rating, there are plenty of reasons to replace your windows.
While new energy-efficient windows will do wonders for your home’s comfort levels and energy bills, window replacement can be a time-consuming and costly process.
In fact, the average homeowner pays between $300 and $700 for each new window. High prices like these can be prohibitive, so finding ways to save money and spread the cost of new windows is a must for many homeowners. From financing (through credit, personal loans, and federal funding) to incentives (such as rebates, tax credits, and special deals), there are options for homeowners in just about any financial situation. This guide explains the ins and outs of window replacement financing and outlines some ways you can save on your new windows.
Window Replacement Financing Programs
Spreading the cost of a large purchase allows budget-minded homeowners the ability to improve their homes when the need arises. Thankfully, there are several ways to finance a window replacement project without feeling the pinch quite so much. This outline takes some of the stress out of choosing a financing option by explaining the pros and cons of each, as well as answering some financing FAQs like “What if I have bad credit?” and “Which loans are good loans?”
Manufacturer financing programs – In the construction industry, large corporations will often offer their own payback plans to help homeowners pay for their new products over time. Check with your window manufacturer to see whether these kinds of options are available to you. The great thing about these kinds of programs is that they are direct and require no middleman, although you will sometimes have to pay extra for this convenience with higher interest rates.
Bank loans – When it comes to substantial home improvement projects like window replacement, many homeowners choose to take out personal loans, use their credit cards, or pull from savings accounts to pay for their purchases. Depending on your credit rating and personal financial situation, this can be the most straightforward payback option. However, if you have bad credit or want to keep your savings account secure for the time being, funding your window replacement yourself can prove debilitating and even impossible. If you’re thinking about taking out a personal loan or using credit to fund your new windows, make an appointment with your bank to discuss the specific loans and offers they can provide.
Home equity loans and refinancing programs – If you’re planning a large-scale remodeling project that will cost more than you can afford to pay right away, you might be tempted to take out a home equity loan. A home equity loan, or refinancing, is essentially a second mortgage. Lenders will allow you to borrow up to 85% of your home’s current value. The interest rates will depend on your lender and your credit history, but these rates are slightly higher than on your first mortgage. However, because most home equity loans have fixed interest, you’ll pay the same rate throughout the duration of your loan. Most importantly, keep in mind that since you’re borrowing against your home, it will be at risk of foreclosure if you default on this type of loan. You should only opt for a home equity loan if you feel confident that you’ll be able to pay off a second mortgage.
Federal Housing Association loans – Most homeowners know that the U.S. government offers several tax credits and incentives for home improvement projects (as noted below), but a lesser-known program run by the Federal Housing Administration (or FHA) provides loan schemes to homeowners who are looking to borrow money for their renovation projects. The Title I program offered by the FHA allows homeowners to borrow up to $25,000 for a single-family dwelling over a repayment term of up to 20 years. This loan comes with a fixed interest rate roughly equal to the common market average—although the specific amount varies depending on your FHA-approved lender. The FHA also offers several other energy efficiency-specific loans for projects that involve the installation of Energy Star-rated products, renewable energy systems, and other energy-efficient home improvements.
Generally, these federal loans offer lower interest rates than credit cards or other personal loans, but you may end up waiting awhile for the processing of paperwork before you get an official go-ahead for your project. Federal loan programs can also be risky for you as a homeowner because more substantial loans will require you to offer your property value as collateral.
Rebates and Incentives
Borrowing money to finance a window replacement project is often the first avenue homeowners choose to investigate, but there are other ways to save money while completing home improvement projects. Rebates, one-off deals and sales, and other incentives such as tax breaks can lower the overall cost of your window replacement and make the entire project more affordable. Here are a few of the national and local rebates and incentives offered for homeowners looking to replace their windows.
Federal tax credits
Although many of the federal tax credits previously available to homeowners expired in 2016, the Bipartisan Budget Act of 2018 reinstates some of these. However, several nonbusiness energy property tax credits (including those for Energy Star-rated windows and doors) were brought back only until the end of 2017. This means that unless your project was completed before this expiry date, you will not be eligible for tax breaks when filing your taxes this year. But if you’re planning to make other energy-efficient upgrades to your home—by installing solar panels, for example—you will still be eligible for up to a 30% tax credit. We recommend checking back for the latest updates to federal tax credit schemes when you decide to begin the window replacement process.
State and local rebates and incentives
Thankfully, there are plenty of other ways to finance an energy-efficient window replacement project. Many private institutions and state governments offer incentives and rebates for homeowners who are looking to make these types of energy-efficient improvements to their homes.
DSIRE, or the Database of State Incentives for Renewables and Efficiency, is a website devoted to compiling a list of all existing incentives and policies for renewables and energy-efficient products. DSIRE is based at the North Carolina Clean Energy Technology Center and is funded by the U.S. Dept. of Energy.
According to data collected by DSIRE, there are several utility companies across Texas that offer substantial rebates for homeowners who want to make energy-efficient changes to their homes. For example, this scheme from Entergy Texas offers up to $5,000 for the installation of energy-efficient improvements from participating contractors.
No matter where you live, check their user-friendly database to search for programs by state and keyword.
Special offers and sales
If you’ve ever completed a home improvement project before, you know that shopping around is the key to finding a great deal. Shopping for new windows is no different: window manufacturers often run seasonal sales and one-off discounts on a variety of products. Of course, these deals don’t stick around for long so it’s a good idea to check back often when you’re shopping around. Another way to find a price that’s right for you is by comparing and contrasting local window professionals. Small and independent companies will vie for your business and offer competitive installation prices, so doing your research at the beginning of the process will be worth it financially in the long run.
Window replacement as a viable financial solution
Even if your credit isn’t great, or if your state doesn’t offer as many incentives or rebates as you’d like for your new windows, the good news is that your investment will still pay off. As is the case with most energy efficiency upgrades, new windows will make your home more comfortable and lower the cost of your energy bills throughout the year (with fewer drafts and more efficient running of your HVAC system). Improvements like these will also help increase the value of your home, should you ever decide to move on and sell your property. If you want to get a better idea of just how much your new windows will cost, you can check out our window replacement cost calculator for preliminary figures.
Consult a Professional
Still on the fence about window replacements? If after reading this article you haven’t decided whether you can afford to fund a window replacement project for your home, speak to a professional for clarification. Let us do the searching for you—simply contact a Modernize rep, and we’ll connect you to a qualified contractor with experience in Energy Star products.