In a perfect world, you’d be able to fill the rainy-day fund and have it cover a much-needed home repair in a pinch. Unfortunately, rainy-day funds get depleted more than we’d like. Sure, you can scrimp and save for a new window or tub if you just want the upgrade. If you need to take some out for, say, a flat tire, you can fill your rainy-day account back up over time.
But what if a repair catches you unawares, and you need it now? Storms knock trees into houses and smash windows, roofs have leaks, and bathrooms get water damage that require a major repair. You just spent your rainy-day fund on an auto repair, a surprise bill, or even the holidays and now you’re scrambling for funds!
If you gave everyone a happy holiday or directed your savings to another emergency and there’s not much left in the till for home repairs, not to worry! There are tons of easy ways you can finance an upcoming home repair or replacement. If you need a surprise, emergency home repair, here are some ways to finance your home repair.
First thing you should do is check your homeowner’s insurance policy. Many of these policies allow you to file a claim and cover property damage. Review your policy so you can be sure what repairs are covered or not covered under your plan. Speak to your representative and they’ll help you file a claim.
Pay now, or pay later
Let’s assume some worst-case scenarios. Your insurance won’t cover your entire, or even a part of your claim. Or maybe you don’t have homeowner’s insurance; in that case, we hate saying that you probably learned a hard lesson in why it’s important to invest in this insurance. Either way, if you have no funds on your own to cover the repair, you’re going to have to weigh the pros and cons of waiting or getting a loan.
If you don’t have funds, with or without insurance helping you out, you’re going to have to weigh the costs of borrowing as soon as possible, or waiting until you have enough money saved. For smaller repairs, you can “bandage” the damage for a short time. However, you need to factor how long until you can save for your repair versus how long until the damage becomes worse.
If you need a loan and can’t wait, there are options. We’re home repair experts, not financial experts, so if a loan is the way you need to go, consult your mortgage broker, insurance provider, or a financial expert to walk you through all of your options.
One of your options is a home equity loan, also called a second mortgage. If you’ve been a homeowner for a while, you have equity in house. That means you can borrow a certain amount of money against the cost of your home, mainly, what you already paid toward your mortgage. You will have to pay back this loan in fixed installments over a set period of time.
If you don’t have enough equity, there are federal and state loans you can apply for to help with the costs. The U.S. Department of Housing and Urban Development outlines your options in a repair situation here, including the Title 1 Property Improvement Loan Program. This is for people who don’t have a lot of equity in their homes, or don’t want to take out a second mortgage.
If you’re in a tough spot with an emergency repair, we can help. Contact us today and we’ll help you walk through all of your options. Before signing up, you can even receive a free estimate so you can arm yourself with a ballpark estimate.