Replacing a roof a quite expensive. It is one of the major expenses you have to face as a homeowner—the average cost of replacing the roof in the USA range from $5,500 to $11,000. You have to depend on financing if you don’t have cash in hand and insurance to cover the roof replacement cost. Here is a step-by-step guide on how you can finance your roof replacement.
The cost of home improvement can make you overwhelmed when you do not have enough finances or do not know how to finance it. In numerous circumstances, roof replacement is not a desire; it is a necessity. If your roof gets damaged from a storm or any other natural disaster, you have no choice other than to replace it.
Here is a step-by-step guide on financing the roof replacement that will help you make a good financial decision.
How New Roof Financing Works
Before learning about roof financing, you should first understand how it works. The financing process starts with an inspection of your roof to determine whether you need roof replacement or repair. It is always best to go with a professional roofing company like Dream Home Improvement to get the best possible inspection.
Roof Financing Options
It is out of the question to postpone your roof replacement as your roof plays an important role in protecting you, your family, and your prosperity. But, what should you do when you do not have enough finances.
Home insurance is the primary way to finance roof replacement. For most people, it is one of the easy ways. Your insurance claim may get denied then; it is your bad luck with this option. It is important to know that you have to get an inspection of your roof before filing for a claim.
Home Equity Loan
Another way of financing your roof repair is a home equity loan if your insurance does not cover your roof repair. The Federal Trade Commission issues this money, a fixed amount of money that uses your home as collateral. You can say a second mortgage is paid over a specific period.
This financing option is very helpful if you have a steady income. There is a specific percentage amount that you can lend. It is 85% of the value of your home minus the mortgage balance.
Suppose the total price of your home is $300,000, and you owe $200,000, and the remaining amount is $50,000. Then multiply this amount by 0.85 to get the 85%, so the amount available for your home equity is $85,000.
These loans usually have lower interest rates, are suitable for larger expenses, and are better than other financing options. However, this type of loan has some disadvantages. These loans may have an approval period of two to four weeks. And there are chances that you may lose your home if you fail to pay the amount.
Home Equity Line of Credit (HELOC)
Another way of financing your roof replacement is a home equity line of credit or HELOC. Instead of borrowing a big amount, this financing option is like your credit card. You can pay as much as you want for your selected period until you do not exceed the credit limit.
The method of calculating the HELOC is similar to Home Equity Loan. You are able to get the 85% of the appraised value of your home minus the total amount you owe on your first mortgage. Some loan providers will allow you to spend money from HELOC by writing checks or using a credit card.
These loans usually have variable interest rates that may start lower than the rate of home equity loans. After these promotional rates, you have to face a significant rise and fall. The benchmark movement determines the interest rate’s rise and fall.
Another way of financing your roof replacement is a personal loan. It mainly depends upon the lender’s terms and approval factor. One of the best things about this type of loan is that your precious assets won’t be at risk as they do not require any collateral. The primary source of funding for personal loans are banks and financial institutions.
In a personal loan, you will get a sum you have to pay over time, mainly for a few years. Each lender offers different interest rates and terms, so research before choosing one.
Best Home Renovation Services in Cape Cod
Dream Home Improvement is a complete home repairing service company in Cape Cod. We offer repair services for basements, bathrooms, kitchens, roofs, ridge vents, and sidings. Dream Home Improvement ensures the customer we serve has the best experience possible. Contact us to start working on your new basement, roofing, and remodeling project. You can also schedule a free in-home consultation by calling us at 774-208-3589. Our experts will show you the latest roofing trends that can completely update the look of your home. Boost the value of your property and protect your investment.