How to Finance New Siding on a Home
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New siding can do wonders for your home’s appearance and energy efficiency — but it’s costly. Installation can run you thousands of dollars for material and labor, and most people don’t have that kind of cash on hand. Luckily, there are valid options to help finance your new siding that may be able to fit within your budget.
In this article, we’ll help you understand what you need to do before committing to new siding on your home — and then how to pay for it.
What siding options do I have?
If you’re considering new siding for your home, you’ll first need to decide the type of material you want to use. There’s plenty to choose from, all coming in at different price points. You’ll want to choose your material based on factors like cost, maintenance requirements and how it looks. Find out what type of siding homes in your area use most frequently.
Here are a few of the most common types of siding, but the list is far from exhaustive.
Vinyl siding is one of the cheaper options, averaging $4 per square foot for the materials, according to HomeAdvisor, but ranging anywhere from $2 to $7. A typical installation job can cost around $8,000. Since this type of siding is made of polyvinyl chloride plastic, it won’t likely rot but has the potential to crack as time goes on.
Metal siding, especially aluminum, can also be less expensive, costing about $3.50 to $4.75 per square foot, per HomeAdvisor, with installation rates being around $6,000. This material stands strong in cold weather and salt air, and won’t crack over time. But beware, it can dent.
Wood clapboard is made from trees ranging from pine to spruce, and priced accordingly. This siding can start at just over $3 per square foot and goes up to $15.75 per square foot, according to HomeAdvisor. The standard installation price is about $5,000 making it less than both vinyl and metal. However, this type of siding may require more maintenance, including regular staining, to keep it looking its best.
Stucco may be one of the more expensive types of home siding on the market, with a starting price of $6 per square foot, per HomeAdvisor. However, the installation can be less than with other materials, ranging from roughly $2,000 to $6,000. If you live in warmer areas, this might be the material that works best because it helps retain the cool air while blocking out the heat.
What to do before committing to new siding
Now that you have an idea of the different types of siding materials to choose from, you’ll need to find a professional contractor to work with. But before you commit to one, here are a few things you’ll want to do first.
Get multiple quotes. As you shop around for contractors, be sure to get quotes from several different companies — usually a minimum of three — to get a good sense of what the job should cost.
Compare what’s included in each price. Ensure each quote provides you with a breakdown of everything that is included in the price, such as labor, the estimated time of completion, and materials. Feel free to inquire about all the different material options you’re interested in to get an idea of what might fit within your budget.
Check references. Going online to check out a company’s reviews is a good start, but getting actual references from real customers will put you ahead of the game. This can provide some reassurance that the company has done good work in the past and had the customer satisfaction to back it up. If you find that a neighbor has used a contractor, you can even see their work in person.
Watch for red flags. The Better Business Bureau advises you to watch out for contractor scams, which can involve paying a lot of money upfront and having the contractor disappear when it comes time to get started. The BBB website says there are certain things to watch out for, such as “cash-only deals” and “high upfront payments.” You should also steer clear from a contractor that prefers a handshake to a written contract. It’s also important to work only with contractors who are licensed, insured and have proper work permits.
The ins and outs of contractor financing
Oftentimes, a contractor will have a relationship with a particular lender and offer you special deals on financing your home projects. And since there is already a relationship between the contractor and lender, the application and approval process are generally fast.
With this type of financing, customers can take out a loan for as long as 12 years and make monthly payments rather than paying the full amount all at once. Contractor financing programs often provide an interest-free period to help sweeten the deal.
However, be careful with any interest-free period offer. While that can be a good deal, it’s important to keep in mind that you may end up paying back that interest if you can’t pay the loan in full during the interest-free time period.
Other options you have for financing new siding
Contractor financing programs might work for some homeowners, but it won’t be best for everyone. Thankfully, that’s not your only option when it comes to paying for your new siding. Here are a few other alternatives to help finance your upcoming project.
Home equity loan
If you have equity in your home, you may consider getting a home equity loan to help pay for your new siding. These types of loans normally have fixed rates, meaning you’ll make a set payment each month for the life of the loan. Terms can be anywhere from five years to around 15. However, to get the best rates and terms, you’ll likely need a high credit score. And while most people can usually borrow around 85% of the home’s overall value, a borrower’s financial history will help determine the exact amount.
With a cash-out refinance, you’re able to take out another mortgage for a larger amount than the outstanding balance on the one you currently have. You can then use the cash that’s left over after paying the original mortgage to fund for your home renovation. However, closing costs can be high and you will need a significant amount of equity in your home to qualify.
FHA Title I loan
An FHA Title I loan can be used for renovations that help enhance the home. The loan amounts usually top out at $25,00 for a single family home. These loans have a fixed rate and can use your home as collateral without needing equity in the home.
Unlike other loan options, personal loans do not use your home as collateral. However, because they are unsecured, lenders consider them riskier and charge higher rates. You can possibly get a personal loan for around $35,000 with standard terms running between one to five years, depending on your financial history and credit score.
FHA 203(k) refinance
This type of refinance option allows you to get your current mortgage upgraded to help pay for renovations. You don’t necessarily need any equity to qualify, but the location of your home can impact the amount you can borrow.
If you don’t already have a lot of credit card debt, you may consider using one for your new siding — but be careful. There can be some serious perks to using credit cards, such as getting cash back on purchases, and some cards offer a 0% introductory period. However, if you’re already drowning in credit card debt, you may not want to tack on more. More credit card debt can possibly damage your credit score and cause more financial strain. And in general, credit cards will have steeper interest rates than other forms of financing.
The bottom line
Getting new siding on your home can be a smart investment. And like every smart investment, it’s best to shop around to get the best deal. Determine what type of siding material you want to use and then get quotes from multiple contractors to weigh your options. Taking your time to shop around will help ensure you find the right materials and contractor that can get the job done correctly and most cost-efficiently.