So, your air conditioning just went out in the middle of summer and needs to be replaced. Or maybe you noticed a leak in your roof last month and it is only getting worse. Whatever the case may be, home repairs can be costly – especially if they are unexpected. If you are not prepared for them, repairing your home can seem impossible. But do not worry, we’re here to help! This blog post will discuss 8 different ways that you can finance home repairs.
HELOC
A HELOC, or Home Equity Line of Credit, is a type of loan that allows you to borrow money against the equity in your home. It is a revolving line of credit, which means that you can borrow and repay money as often as you want, up to the credit limit. These home equity lines of credit typically have a lower interest rate than other types of loans, making them a great option for financing home repairs. You need to know a few things before applying for a HELOC, though.
First, your home must have enough equity to qualify – this is the value of your home minus any outstanding mortgage or other liens. Second, HELOCs typically have variable interest rates, which means that the interest rate can change over time. And lastly, most HELOCs have an annual fee, so be sure to factor that into your budget.
Grants and Special Programs
If you are a low-income homeowner, there are a number of different grants and special programs that can help you finance home repairs. The government offers a variety of these programs, which are typically need-based. That means that if you can demonstrate financial need, you may be eligible for assistance. Some of these programs may also have income restrictions, so be sure to check the requirements before you apply.
Some of the most common programs that offer assistance for home repairs are the Low-Income Home Energy Assistance Program (LIHEAP), the Weatherization Assistance Program (WAP), and the Housing Choice Voucher Program (HCVP).
Home Equity Loan
Another option for financing home repairs is to take out a home equity loan. This is a type of loan that allows you to borrow against the equity in your home. Home equity loans typically have a fixed interest rate, which means that the interest rate will not change over time. This can be beneficial if you are worried about the interest rate on a HELOC increasing. Home equity loans also usually have a term of five to 15 years, which means that you will have a set amount of time to repay the loan. One thing to keep in mind with home equity loans is that they typically have closing costs, so be sure to factor that into your budget.
Zero-Percent Credit Card
If you have good credit, you may be able to take advantage of a zero-percent credit card. These cards offer an introductory period of time, usually 12 to 18 months, during which you will not be charged interest on your purchases. This can be a great way to finance home repairs because you can avoid paying interest on the money you borrow. Just be sure that you’re able to pay off the balance before the introductory period ends, or you’ll be stuck with a high-interest rate. In addition, be sure to read the fine print on these cards before you apply, as there may be other fees or restrictions.
Refinancing
If you have equity in your home, you may be able to refinance your mortgage and get cash out. This means that you would take out a new loan, with a new interest rate and term, and use the cash from the loan to pay for home repairs. This can be a good option if interest rates have gone down since you originally took out your mortgage, or if you need a longer term to repay the loan. Just be sure to compare offers from multiple lenders before you decide on a refinance, and be sure to factor in any closing costs.
Take Out a Second Mortgage
Another option for financing home repairs is to take out a second mortgage. This is similar to a home equity loan, but with a few key differences. First, a second mortgage is a separate loan from your first mortgage. That means that you will have two monthly payments – one for your first mortgage and one for your second mortgage. Second, a second mortgage typically has a higher interest rate than a first mortgage. And lastly, a second mortgage is not always tax-deductible.
So, be sure to talk to your tax advisor before you take out a second mortgage.
A loan from Family or Friends
If you’re lucky enough to have family or friends who are willing to lend you money, that can be a great way to finance home repairs. Just be sure to put everything in writing, including the interest rate and repayment terms. You do not want to damage your relationship with these people by not being able to repay the loan. In addition, you’ll have to make sure that you’re comfortable with the idea of borrowing money from family or friends. Some people are uncomfortable with this, so be sure to think it through before you decide to go this route.
Use your Savings
If you have savings, that is a great way to finance home repairs. You won’t have to worry about making monthly payments or paying interest, and you will have peace of mind knowing that you’re not borrowing money. Just be sure to leave enough in your savings account to cover any unexpected expenses.
And there you have it – eight tips to help you finance home repairs. Be sure to consider all of your options before you decide on a method of financing, and be sure to shop around for the best rates. With a little planning and effort, you should be able to find a way to finance your home repairs.
