A remodeling project might be all you need to turn your house into your dream home. Maybe you’re picturing a chef’s kitchen, a spa-like bathroom or an elaborate garden retreat. Or maybe it’s time for an extra bedroom and more living space.

If you’re ready for an upgrade, there are a lot of loans to get you there, from a home equity loan or line of credit to a construction loan or homestretch refinance. Let’s compare the options.

• Home Improvement Loan
• Home Equity Loan
• Home Equity Line of Credit
• Homestretch Loan
• Construction Loan

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Home Improvement Loan

A home improvement loan offers a convenient way to borrow from your home equity without requiring you to refinance your mortgage. That means if you have a great low mortgage rate, you can keep it. Instead of a refi, you’ll get a home improvement loan with reasonable terms and loan amounts up to $250,000 to cover a range of remodeling projects.

PNWFCU Home Improvement Loan Benefits

• Loan amounts up to $250,000 with flexible terms up to 20 years.
• Competitive fixed loan rates without the requirement to refinance into a higher rate.
• Flat $1,000 origination fee.

The home must be an owner-occupied primary residence with the mortgage financed or serviced by PNWFCU. Third party fees are paid by the borrower.

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Home Equity Loan

With a home equity loan, you borrow from the equity in your home. So if your home is worth $650,000 and you owe $550,000, you may be able to borrow a portion of the $100,000 from your equity. The home acts as your collateral, which typically means you’ll get a lower interest rate than with an unsecured personal loan.

Related: Try this home equity loan calculator to see how much you might be able to borrow.

You’ll get a lump sum with a fixed interest rate, and you’ll start paying it back in equal monthly payments right away. This can be a good option if you know how much you need for your remodeling project and you want to know exactly what you’ll be paying each month.

PNWFCU Home Equity Loan Benefits

• Fixed interest rate and payment amount, so you’ll know what to expect each month.
• Terms up to 20 years to meet your financial needs.
• Up to $100,000 loan amount if your first mortgage is with PNWFCU.

This option is available for owner-occupied primary residences.

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Home Equity Line of Credit

A HELOC is a revolving line of credit. You borrow against the equity in your home, but in this case you only borrow what you need when you need it. HELOCs are similar to credit cards in that you have an upper limit that you can borrow, and you can pay it off each month and just have it as an option to use when you need funds.

If you have ongoing and unpredictable remodeling costs, this option might work well for you. You will be able to fund your home improvement costs by only borrowing what you need, when you need it, so you’ll only pay interest on the funds you withdraw.

PNWFCU Home Equity Line of Credit Benefits

• 5-year draw period to borrow what you need, when you need it, so you won’t pay extra interest on funds you don’t need yet.
• Renewable up to 2 times for a total 15-year draw period.
• Maximum $50,000 credit limit if your first mortgage is with PNWFCU.

This option is available for owner-occupied primary residences. There’s a monthly payment of 1.5% of the balance or $150, whichever is greater. After the draw period, your HELOC converts to a fixed rate for a 15-year repayment term.

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Homestretch Loan

Another creative way to fund your next home improvement project is with a cash out refinance. If you have quite a bit of equity in your home, you might be able to refinance with a lower rate and shorter term while also taking cash out to pay for your remodel.

Our homestretch loan is specifically designed for homeowners in the “homestretch” looking to shorten their mortgage terms and pay off their loans quickly.

PNWFCU Homestretch Loan Benefits

• Low fixed interest rates.
• 12-year maximum loan maturity for a sooner payoff date.
• Option for an evaluation instead of a full appraisal to save on typical mortgage financing costs.

This option has a $150,000 maximum loan amount and 75% maximum loan-to-value ratio, with a $1,250 fee plus third party costs.

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Construction Loan

If you’re planning a larger scale renovation project, you might want to consider a construction loan. This option typically comes with a larger maximum loan amount, giving you the flexibility to pay for big structural changes to your home.

PNWFCU Construction Loan Benefits

• Maximum loan amount of $726,200 to cover new builds, manufactured home builds, land purchases or major structural remodeling.
• Interest rate reduction and interest-only payments during construction period.
• Construction period of up to 12 months, with a one-time closing guarantee and automatic conversion to end loan (if applicable) without needing to refinance, so you can avoid unnecessary fees.

We offer a list of approved contractors, or you can bring your own contractor. Terms and conditions apply.

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Comparing Home Renovation Loans

Here’s a comparison of the loan options to consider for your next home improvement project.

Chat with our mortgage team or apply online to take the next steps to finance your remodel.