Homeownership can get expensive fast, and it isn’t limited to the purchase price. You have to pay the mortgage, insurance and property taxes – but these are easy to budget for. The budget-busters are the large, unexpected repair bills that can occur at any time. This can range from a hole in the roof to a hot water heater that just flooded the living room. Many of these repairs can’t wait until you save up for it either. Here are 5 common ways to pay for unexpected repairs.
If you have a home warranty policy or homeowner’s insurance, find out if it covers the repair before you call for service. You may find that the service is covered by the policy, though it may only be partially covered. Yet it is always worthwhile to ask since this can save you quite a bit of money. The biggest issue here is the time it takes to get the insurance company to arrange and pay for the repair.
Your Emergency Fund
If you already have money saved, you can use your emergency fund to pay for it. However, this requires having an emergency fund in the first place. It may not be enough in the case of major repairs either.
For example, a thousand dollars may pay for a hot water heater repair, but not the ruined carpets. A $2000 emergency fund might pay for holes in the roof, but it won’t cover the total cost of replacing the whole roof. If it’s not enough, it means that you’ll have to look at additional sources for financing.
Installment loans are just like personal loans. However, in most cases, installment loans are based on your income, not your credit score. This means you can often qualify for an installment loan with bad credit, as long as you can show significant proof of income.
Many loan companies offer bad credit installment loans online. You can enter your information at any time, and you could get the money in a day or so. This is far faster than applying for a credit card and then using it, and it is a good option for those who need money fast to pay for essential home repairs.
Home Equity Loans
Home equity loans have several points in their favor; they have a low interest rate for one. If you have equity in your home, you could qualify for a HELOC or home equity line of credit with your mortgage lender rather quickly. The loan amounts could cover major repairs such as replacing an entire roof or a home renovation project. The downside is that it can take a while to get approved, and it isn’t an option if you don’t have enough home equity to qualify. You’re also putting your home at risk; if you fail to pay the mortgage or the HELOC, your home could be foreclosed on.
Personal loans are another option you can consider. These loans are unsecured, which means you don’t have to put collateral up like your home or car. However, they may come with a high interest rate. This is why it is essential that you read the fine print carefully before you agree to the personal loan. It may come with conditions such as automatically debiting the payment out of your bank account using the same information that they needed to deposit funds in your account in the first place. Don’t make a mistake that could cause the interest rate on the loan to ratchet up.
Home repairs can be expensive, yet there are a number of ways you can pay for them, even if you don’t have the cash on hand to do so. So, make sure that you consider all viable options, and choose the one that will fit your needs the best.