Roof Replacement Cost – 8 Ways How to Pay for Roof Repairs with No Money
Replacing your roof is expensive. There is simply no way around it but, it is also the most important component of your home.
If your roof leaks, it can cost you thousands of dollars in repairs and thousands of more dollars in personal property damage. Even just a small leak will become big damage when left unrepaired.
Roof repairs for small leaks range from quite manageable to very expensive. However, a federal study in 2018 showed that 40% of adults could not afford an unexpected $400 expense.
So, how can we expect to pay an unexpected expense of $10,000 to $13,000 for a roof replacement on an average home?
A roof replacement is often not really a choice, but mandatory if you would like your home to continue doing what it is meant to do, protect you. Considering that, we have compiled for you 6 ways to pay for your roof repairs with no money.
Insurance Claim
A competent roofing company will always look for hail damage first and then research to see if there was a hail date within the last year.
Insurance will pay for a hail damaged roof’s repairs and up to the replacement of the roof. This is a great option if your whole roof needs to be replaced.
You will still need to pay your deductible since HB2102 passed. You can learn more about HB2102 here at Do I have to pay a deductible for hail damage to my roof?
Your deductible will normally be anywhere from 1 to 3 % of your liability coverage. For a $250,000 home that is $2500 to $75000 but still much less than a roof replacement.
But what if your roof only needs a repair that less than your deductible? Or you say “that’s all great but I can’t cover $2500”. Or what if there isn’t any hail damage and your roof is just old and worn?
Well, that’s why this is 8 ways and not one. Let’s keep reading.
Credit Cards
For small repairs, credit cards are a great option. Some cards even offer incentives like cash back, airline miles and XX months at 0% interest. However, they are not so good for larger repairs or replacements.
Most credit cards have a high-interest rate. Unless the credit card company is offering great incentives then larger expenses make less sense.
Remember that insurance deductible? In a pinch, a credit card could be a good option to cover that expense. Also, credit cards are great when you know that you will be able to pay them off quickly.
Making minimum payments are never a good financial decision, but it may help you get your roof repaired that can’t be postponed while waiting on other money that is coming, like a tax return.
Company Financing
Finding a company that offers financing isn’t too hard these days. Now that it is illegal to offer any kind of deductible assistance, credit, or incentive it has compelled even smaller companies to offer financing in some form.
Many companies, like Baker Roofing & Construction, offer a variety of financing. We work with several lenders to provide the best options for all credit ratings and income levels.
Our lenders provide options like no payments for 18 months or 12 months of no interest but, there are trade-offs to them all. Interest rates will vary depending on the option you choose. They offer secured and unsecured loans.
Financing is a great choice for many homeowners facing larger projects or have higher deductibles. Companies may have a minimum project cost for which they offer financing.
Cash-Out Refinancing
A Texas cash–out refinance loan, also called a Section 50(a)(6) loan, will allow you to takeout the equity of your home while refinancing and locking in your interest rate.
If you have enough equity in your home and can get a better interest rate then this is a really great option for you. Certain circumstances make this a better choice than others though.
You wouldn’t want to do a cash-out refi for home improvements then move within the next year or two. You want to be sure that you will be able to accumulate enough equity before moving again.
It is important to remember that these loans will likely change the conditions of your mortgage. You will want to be very sure that any changes will be good for you in the end.
With any decision like this, you will need to check all the details. For example, it may require PMI, private mortgage insurance, to be paid that you may not have been paying before. Additionally, these loans will have closing costs to consider.
Home Equity Loan
You can use your home’s equity to get a loan as well. It allows you to use your equity as collateral. You can take a loan of up to 85% of your home’s equity.
If your home is worth $300,000 and you owe $120,000 then you have $180,000 in equity. You can take a loan up to 85% of $180,000 or $153,000.
A home equity loan will be a separate loan payment from your mortgage. This means you need to be sure that you can afford to make payments for the loan or you could be subject to losing your home.
You can mitigate your risks by taking the lowest amount possible to complete the repairs. It is common to have a line of credit available so that you can take only as much as you need.
FHA Title 1 Loan
The Federal Housing Administration provides the Title 1 home and property loan program. This loan is designed to help improve your home and property. You can get up to $25,000 with payments over 20 years.
The FHA insures the Title 1 loan so that it keeps the risks lower for the lenders. You will need to research lenders in your area to find the best rates for you.
These loans are perfect for homeowners needing a small loan for repairs who can only afford a low payment. 20-year payback terms are unheard of for most loan types.
Personal Loan
You can always apply for a personal loan. As with any loan, these will be based on your credit score and debt to income and can range wildly from one lender to the next.
Personal loans can be secured or unsecured. Secured loans require collateral for the loan. Unsecured do not require collateral but have higher interest rates to combat.
Higher interest rates are common with personal loans as compared to other loan types. Payback terms tend to be shorter as well. Again, carefully analyze your options before committing.
Government Grants and Loans
The government offers some low-income home and property loans for improvements and safety upgrades. Two of these being from the DOE and the USDA- RD.
WAP
The Department of Energy, DOE, offers the WAP program. The Weatherization Assistance Program (WAP) was created to help low-income homeowners decrease their heating and cooling costs and making their homes more energy-efficient.
Low-income families with children, senior citizens, and low-income families with a disability are prioritized. If your household qualifies, you could receive a government grant for a roof replacement.
Section 504
The USDA- Rural Development provides the Single-Family Housing Repair Grants and Loans program. Designed for very-low-income families to repair and modernize their homes.
Strict requirements for loans up to $20,000 like exceptionally low income, and unable to obtain credit anywhere. 20-year repayment terms and fixed 1% interest.
For a grant, you must be 62 or older and not able to repay a loan. The grant must also be made to upgrade safety or remove hazards. Grants are limited to $7,500 a lifetime.
Conclusion
Even though severe storm damage is inevitable in Texas, all is not lost. There are always options to keep your home in its best shape. Although it is never nearly as much fun to spend money on home repairs and improvements as is on other interests, your home is likely your largest asset.
Protecting your assets should be your priority, neglect will be far more costly in the long run.
