According to one report, homeowners in the U.S. spend an average of $6,000 on home repairs and maintenance each year. Do you have that much money saved up in case an emergency hits?
While experts recommend putting aside at least 1% of your annual income to cover unexpected repair costs, many people would find such an expense financially draining.
From a leaky roof to a crack in your foundation, there are many different types of issues you could encounter at your property. When you need to get cash quickly, there are resources that can help you do so.
Today, we’re sharing a few of the best and most effective ways to pay off those bills, keep your home safe, and get back on your feet.
A Home Equity Line of Credit, or HELOC, is one of the most common ways to cover emergency home repair costs.
This type of funding allows you to borrow against the available equity in your home. Equity is the total value of your home, minus the amount that you still owe on your primary mortgage. To secure the funding, your house is used as collateral.
In short, a HELOC works as a type of second mortgage. You can choose to pay it all off at once or to break the payments into monthly installments, similar to a credit card. If you own your home outright and aren’t paying on it, then the HELOC will become your primary mortgage.
The HELOC will work as a line of credit, which you can access as needed to cover home-related costs. You can also choose to pay it off over time, which will free up more funds that you can use later.
While a HELOC can allow you to get financial help on home repairs, remember that it comes with a risk. If you cannot pay the amount back according to the terms, then the lender could take possession of your home. Only go this route if you know that you can confidently cover the repayment.
While they might sound similar, a HELOC isn’t exactly the same as a home equity loan. However, they do have a few things in common.
Both HELOCs and home equity loans are based on the value of your home. However, a home equity loan is not an open-ended line of credit. Instead, you’ll receive it as one lump sum (similar to a mortgage) and you’ll pay it back in pre-determined installments, along with interest.
While this option is attractive to many homeowners, it’s important to know that your credit score will usually determine the rates and terms you’re given. Some lenders could refuse to offer you a home equity loan altogether if your score is in the “fair” or “poor” range.
In most cases, you’ll apply the loan to a specific expense, such as a new roof. If you need to cover another emergency repair down the road, you’ll need to apply for a new, separate home equity loan.
If you don’t want to put your house on the line with a home equity option, then it’s worth looking into unsecured personal loans instead.
You can use a personal loan to cover a range of different expenses, including emergency home repairs. While there are many different lending options, you’ll likely need one that can expedite the application process as much as possible.
Traditional lenders, including banks and credit unions, tend to take a while to approve applicants. This is because they take a deep dive into your financial history, including your credit score, to measure your creditworthiness. In addition to the time it takes, there are also myriad forms to complete and documents to submit.
On the other hand, fast cash lenders can help you get money in your hand as soon as the next business day. While their loan terms might be more restrictive and their interest rates are often higher, this is the quickest way to secure the funding you need as soon as you need it. The application process is faster because many of these lenders don’t check your credit score, looking at your income history and other details to determine your eligibility.
Before partnering with any lender, be sure to carefully read their terms and understand your requirements. It helps to work with a reputable source from the beginning! When you work with our team at Fast Loan Direct, you’ll get an offer tailored just for you, from a lender you can trust.
There’s a chance that the problem you’re facing might be covered by your homeowner’s or renter’s insurance policy. Before looking into other ways to secure financial help, check to see if emergency repairs are included in your plan. If you don’t see those details listed anywhere, it’s still worth calling to ask.
For instance, if your roof ws damaged by a recent storm, your policy might include a clause for adverse weather events. Filing a claim could help you cover most, if not all, of the replacement costs.
Did you know there are certain programs in place designed not only to help you buy or refinance a home of your own but also cover the costs of unexpected repairs? Some of these programs include:
All of these programs can help homeowners who are struggling to cover the costs of home repairs. For example, FHA-insured Title I Property Improvement Loans assist individuals who have little to no equity in their current homes. Recipients can use the funds to cover major repairs, purchase appliances, or make other adjustments to make their homes more useful and liveable.
In addition to government-backed loan programs, you can also look into local, community-based resources. Many municipalities offer programs through state or local governments, agencies, and institutions. For instance, you can consider applying for a Community Development Block Grant, which the U.S. Department of Housing and Urban Development (HUD) issues to offer emergency repair loans to local homeowners.
While most of these programs have applicant restrictions in place (such as income limits), it’s always worth looking into them to see if you qualify. To learn more, reach out to your city’s housing authority or housing services organization.
For many homeowners, the first and natural instinct when a disaster hits is to take out their wallet and pay for the repairs with a credit card.
While this might get you by in the short term, it’s important to consider the long-term consequences of paying with plastic. If you have the ability to pay off your statement on time and in full each time you receive the balance in the mail, then credit cards can be a good way to build your credit and practice responsible spending.
However, you can run into problems if you’re only paying the minimum amount due each month, or deferring your payments altogether. Carrying credit card debt can exacerbate a cycle that’s difficult to break free of once you’re in it.
Unfortunately, reports show that this issue is more common than most people realize. In fact, almost half of all U.S. credit card holders roll a balance over from month to month.
Before you swipe your card to pay the plumber, roof repairman, or construction crew, make sure you’ll earn enough money before the bill comes that you can pay it back completely.
Don’t hesitate to reach out to local non-profit or community organizations if you need help with basic home repair expenses. From churches and charities to community centers and larger entities like Habitat for Humanity, there are groups in place to assist people who are in your shoes.
You might find that being on the receiving end of such generosity is enough to encourage you to pay it forward one day! In addition to local organizations, you can also ask trusted friends or family members to loan you the money for the expense, especially if it’s minor.
If you decide to borrow money from loved ones, make sure to get all of the details and expectations in writing and create a clear repayment plan up front.
No one expects to face emergency home repairs. Yet, part of being a responsible homeowner is fixing things that go wrong around your property. The next time you’re surprised by a broken HVAC unit, burst pipe, or shingles falling off your roof, you’ll know where to turn.
If you don’t have the money in your savings account to cover these costs, there are resources, programs, and opportunities in place to help. From personal loans to HELOCs, the above resources are a great place to start.
If you’re interested in taking out a personal loan, we’re here to help. Complete our online form to connect with our lenders today!