Replacing a roof is one of the largest expenses homeowners will have to face. A new roof costs an average of $8000 in the United States. You can get financing if you are unable to pay for insurance. Here are some ways to finance your roof.
It can be overwhelming to pay for expensive home improvements, especially if it isn’t possible to pay out of your own pocket or you aren’t certain about financing.
A roof replacement is not something you want to do, but a necessity in many cases. You have no other choice than to replace your roof if you are subject to severe storm damage or a natural disaster.
What should you do if you have to get a new roof, but don’t have the funds?
How New Roof Financing Works
Understanding how financing a roof is done is essential before you can learn about your options. To determine if your roof needs to be repaired or replaced, the process usually starts with a roofing company like A Old Time Roofing. Old Time Roofing is a professional roofer who can provide a thorough inspection and advice on how to proceed.
Once you know the extent of the roof’s structural requirements, you can calculate the cost of the project. To see your financing options, you can review your insurance policy.
If financing is determined to be the best option, you can begin the application. Once your roof has been installed, you will begin paying your monthly installments.
Roof Financing Options
It is not possible to delay a roof replacement project because these structures are vital in protecting your home and property. What should you do if you don’t have the cash?
There are many ways to finance your home improvements, whether you need to repair a roof or install one.
1. Roofing Company Financing
Old Time Roofing understands that not everyone has the money to replace their roof immediately. We offer financing options to allow our clients to purchase a new roof over time.
Some roofing companies do not offer to finance. Others may use unreliable third-party vendors to finance their projects. Old Time Roofing guarantees that your project and financing are supported by one of the best roofing companies in the business.
2. Homeowners Insurance
Although homeowners insurance is not technically financing, it can be used to pay for a new roof.
The majority of people looking for financing have done so through an insurance claim. This option is not available if your claim was denied, or if you were told that your roof replacement wasn’t necessary due to a covered peril.
This would be your best option if you have not had an inspection or tried to file a claim.
3. Home Equity Loan
A home equity loan is another option if your insurance doesn’t cover roofing repairs or replacement costs. A home equity loan is a loan for a set amount of money and your home as collateral. This loan is also called a second mortgage. It is repaid in the same manner over a specified time period.
If you have good credit and a steady income, this financing option may be a great choice. Lenders will typically allow you to borrow 85 percent of the home’s worth, minus any outstanding mortgage balance.
Let’s assume your home has a current value of $300,000. If you owe $200,000, the balance is $50,000. To get 85 percent, we multiply this number by 0.85. Your home equity then becomes $85,000.
Because they typically have lower interest rates than other options for financing your roof, home equity loans can be a great option for large-scale expenses.
4. Home Equity Line of Credit (HELOC).
A home equity credit or HELOC can be used to finance your roof. This home financing option allows you to borrow a lump sum amount but is not a revolving credit line like a credit card. You can borrow as much as you need at any time, provided you don’t exceed the credit limit.
Similar to home equity loans you might be able to access up to 85 percent of your home’s appraised worth minus the amount owed on your first mortgage. Some credit lines allow you to use the credit line to purchase money by writing checks or using a credit card. Ask the lender if there is a limit or a maximum withdrawal amount and how long your plan will last.
Variable interest rates are usually offered by HELOCs. These rates can be lower than those for home equity loans. After the promotional rates have been applied, you might see an increase or decrease depending on the benchmark. It’s difficult to predict the final cost of a HELOC because it is a revolving credit card account.
5. Cash-out Refinance
You can finance your roof replacement or repair by taking money from your home equity via a cash-out refinance. This financing option will replace your existing mortgage with a loan that is higher than the amount you owe on your property. The lender will then disperse the loan funds and you can use the excess to pay for roofing materials or services.
This financial option should only be considered if your current mortgage has a lower interest rate. This method can also be used to pay for your roof if you are able to switch from a variable-rate loan such as HELOC to a fixed-rate mortgage.
Cash-out refinance has the downside that you will end up paying a higher house price in the long term. This is because you will be adding more years to your monthly payment schedule and the closing cost. As with HELOCs and home equity loans, the approval process for cash-out refinances can take a while.
6. Personal Loan
You may be eligible to get a personal loan to finance the roof, depending on the terms of your lender’s loan and other approval factors. This financing option is great because your home and other assets will not be at risk of being foreclosed since they won’t require it as collateral. Personal loans are usually funded by banks or financial institutions.
This unsecured loan allows you to borrow a fixed amount, which you’ll have to repay over a specified term. Typically, this term lasts for several years. You should research different creditors to find the best deal, as each one offers different interest rates and repayment terms.
Personal loans are not backed by collateral. This is a major disadvantage. Personal loans are typically charged a higher interest rate because there is no collateral. You won’t be eligible for a tax deduction to pay the interest.
7. Credit Cards
Your last resort should be to use your credit card to purchase a new roof. Credit cards offer higher spending limits than personal loans and can be used to pay for roof repairs or replacements. However, the high-interest rates of many cards could make your project very expensive.
If your credit card offers generous rewards, incentives, and cash-back bonuses, it may be worth financing your roof with the card. A new credit card with 0 percent interest for 12 months is a good option if you have excellent credit. You will be able to save significant money during the payment term.
You may be able to pay off your expenses in a year if the roof repair or replacement costs aren’t too expensive and you have enough income. If your home improvement project involves extensive structural renovations, you will be charged the standard interest rate once your zero-interest promotional period has ended.
How do I Qualify For New Roof Financing
Every financing option is unique, just like each lender’s terms. You should carefully review the terms and conditions of the financing option that you feel is the best. People who can afford a new roof but cannot pay the full cost upfront can be eligible for financing.
How To Finance a New Roof
It should be your first priority to repair or replace your roof if it is damaged or has reached the end of its useful life. This structure protects your home and property from the outside elements.
We know that finances can seem to be a barrier between you and a new roof. Even if your roof isn’t within your budget, it should be repaired or replaced. Old Time Roofing is dedicated to helping clients obtain the roof that they desire.
Contact us if you have any questions regarding replacing your roof or financing your project before scheduling an inspection. We are happy to assist you!