Financing a New Fence - Best Manner of Financing?

[Anne1208]

My husband and I are in the process of buying a house - we will close in a couple weeks.  We've got an emergency fund saved up that we don't want to touch, and then we're paying cash for all other big ticket items we need out of the gate (furniture, landscaping supplies, etc.).  The one thing we want to get right away, but don't have cash for and don't want to dip into our savings further for - would be a fence. 

Obviously it is a new house and a home equity line isn't an option.  The fence company we want to use says that you apply to Wells Fargo through them, and then that "credit line" can only be used through them to get a fence.  

My concern is that this would mean 100% utilization if it is a "credit" line but do they calculate that the same if it's not revolving credit?  Also, ive seen that a lot of the companies that have a credit line do like, 12 months same as cash, and then the rate jumps to 25.99% or something ridiculous. We will not have the fence paid off quite that quickly, im guesisng, and i do NOT want to supject myself to that sort of interest rate.

I have good credit - all my FICO scores (at leats right now, before the mortgage starts and probably dips me) - are in the high 700s to 800s range. 

Is there another alternative to this that would be less harsh on my credit and provide me with a lower interest rate?  Maybe an unsecured installment loan or something? I have no idea how to finance this fence wisely, but i feel like i should be able to get a good rate for this.  Help!!  

[Anne1208]

......................I should also mention that my only credit right now is one joint card with  my husband with a $1,000 limit.

[Anonymous]

First, you should note that the financing through Wells Fargo will report as a consumer finance account which is viewed as a minor neg by the scoring models. While WF does have traditional bank loans, this would come through Wells Fargo Finance, which is a separate division. Second, this type of financing is usually not the 0% for a while and then the interest kicks in. Normally it would be a fixed rate throughout the term. But it is also likely, as you noted, to be a high rate.

Have you considered any of the web based loan companies? The majority are just a soft pull to check rates. Many offer quite a bit of flexibility in loan amount, length of repayment, and low interest rates. But they also report as consumer finance accounts. Just another consideration.

[Anne1208]

I have not considered much of anything yet since I have not owned a home and am not familiar with the various types of financing.  I was just googling some things and I noticed there are some places like Lightstream (whatever that is) that offer a "home improvement" loan...is that what you are talking about?

I want to do whatever type of financing is the best for my credit, not seen necessarily as a negative and gives a good rate - if thats possible!

[Anonymous]

I'm not familiar with Lightstream. Best thing to do is to shop around for the best deal both with terms and APR to find something that best suits your needs and budget. Here's a list of web based soft pullers: Payoff.com, Sofi.com, Prosper.com, LendingClub.com, Avant.com, Upstart.com, BestEgg.com, CircleBackLending.com, Pave.com, LoanDepot.com, and PromiseFinancial.com are all soft pulls to see if you qualify, how much you can get, and at what APR.

Note: I've checked rates with all of these, and all were soft pulls at the time of app. However, you should verify that is still the case before checking your rate.

[Anne1208]

Great! Thank you 

[Anonymous]

Do you or your husband have a 401(k)? If you do (and there are enough funds available), I would consider borrowing against it.

I would only do so if you plan to repay the loan in a relatively short period of time (a year?). The reason for that is that if you would leave your job and need to roll over your 401(k), you have 90 days to repay the rest of the loan or it becomes a disbursement. That means you'd have to pay a 10% penalty and the money isn't back in the 401(k) where it belongs for your retirement. But for a shorter term loan, it makes more sense.

A lot of financial advisors advise against borrowing against your 401(k). That advice makes sense if you are considering borrowing money that you wouldn't borrow elsewhere. But if you have already made up your mind to borrow the money from someone, you might as well borrow from yourself. The interest you pay back goes into your 401(k) and will almost certainly be more (significantly more) than you would have made in any reasonably resposible mutual fund. So your retirement account actually grows faster than it would have otherwise, and you aren't out any extra money because you were planning on giving the bank (or another lender) that interest anyway.

[Anonymous]

I just got an FHA title one loan for home improvements, not sure if a fence qualifies or not but up to 7500 is unsecured and over that is secured with the house, no equity needed. My mid-score was 705 and I asked for the max and was approved (5 years at 5.25%). It made my initial home improvements affordable without having any equity or having to touch my savings. PM me if you want more details.