Furnace & HVAC Financing Tips - Genisys® Credit Union

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Your Furnace Went Out - Now What?

on 2/8/2017

Woman with Frozen FaceA chill in the air can be invigorating, but not when it is in your house.  That indoor cold wave is usually the result of a broken down furnace. 

Without much savings on hand, what do you do?  Start chopping wood? 

Don’t get that ax out yet.  First, consider these home repair loan options.

Most people don’t plan for the cost of a furnace repair in their monthly budget.  It’s even worse when you find out that repairs won’t do the trick, you’re going to need a whole new furnace.  

Furnace prices may prohibit paying out-of-pocket.  According to HomeAdvisor.com, the average cost of a new furnace is just shy of $4,000.  If you’re looking to save energy costs in the future, the cost rises to an average of $5,500 for a high-efficiency furnace.

Home equity to the rescue

If you have owned your home for a few years or more, you have likely built up some equity that you can use as collateral for financing.  A home equity loan may be one of your best options for financing that new heating system. 

There are two types of home equity loans to consider.  You can elect to borrow a lump sum and pay it back over a fixed period.  These “home equity term loans” usually carry a fixed rate.

You can also opt for a home equity line of credit or “HELOC,” a revolving line that lets you borrow against the equity in your home by writing a check.  These loans usually have a variable rate and are best arranged before having an emergency need.  By applying in advance, you will know how much you can borrow and only use the credit when you have a need.  You also have the ability to act faster since your loan is already approved when the need arises.


Consider a Personal Loan

Many lenders make unsecured personal loans for a variety of needs.  Home repairs and improvements are a common purpose. 

Personal loans usually carry higher interest rates than home equity loans, but not as high as credit cards.  With a fixed payment term, you know exactly how much you will pay each month to satisfy the debt.

If you qualify, a personal line of credit can be a useful option.  Like a HELOC, you can apply for the personal line of credit before you have a need and use the credit only when an emergency occurs.


Financing Energy Improvements

As long as you need to get a new furnace, why not reduce your monthly heating bill with a high-efficiency furnace?  They cost a bit more but should provide a good payback over time.


Look for loans specifically designed for energy improvements.  For example, the Michigan Saves Home Energy Loan Program makes financing for energy upgrades very affordable.  Michigan Saves is a non-profit organization dedicated to making energy improvements easier for consumers, so interest rates with this program are low for a loan that requires no collateral.


It’s easy to learn your financing options with Michigan Saves.  You start by locating an authorized contractor at www.michigansaves.org.  The contractor will then inform you of the efficiency rating of the furnace required to qualify for a loan under the program.  Once you decide which furnace is best for you, the contractor helps you arrange financing through a select group of lenders, including Genisys Credit Union.      


Michigan Saves loans are available for a variety of other energy improvements including windows, air conditioning, and appliances.  At the end of 2016, the Michigan Saves loan rate was as low as 4.99% for loans of $30,000 or less.  Repayment terms can be as long as 120 months, making payments very affordable.


When a cold wind starts to blow through your living room, don’t panic.  There are better options than the old woodpile to help you restore comfort to your home.


© Genisys Credit Union and www.genisyscu.org, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content.

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