A roof replacement is one of those projects most homeowners dread having to pay for. Whether your roof has been damaged by a natural disaster or wear and tear over time, getting a new one is an expensive proposition. Many homeowners are ill-prepared to pay for roof replacement out of pocket, especially when it’s unexpected.
Unfortunately, delaying the work can lead to unsafe living conditions and even costlier damage. Financing is how many homeowners get a new roof when a replacement can’t be put off any longer. From cash savings to roof company financing, here are the most common roof financing options you can choose from.
If you can pay for your roof replacement with cash, do it. Paying all at once with cold hard cash is definitely the simplest way to finance a new roof. Why? You won’t deal with any complicated paperwork or approval process, and you don’t need to worry about interests and repayments in the coming years. Be sure to use checks or money orders so you have a way of tracking your payments.
The only thing required is a deposit to assure everyone is on the same page about the project, then you’ll transfer the remainder of the funds after the roof is installed to your satisfaction.
However, if making a cash payment means depleting your savings, you might want to consider other options. Getting a loan and paying it off with larger payments can help keep your cash flow at a health level.
All homeowners are required to have homeowner’s insurance. The coverage protects your home against damage caused by theft, fire, or another unforeseen event like extreme weather. If your roof damage is directly linked to a covered event, the insurance company may pay for the replacement.
If you’re eligible for roof replacement through your insurance company, it’s essential to get in touch with them to find out how much they’ll cover and learn about the process for receiving payment. Then you only have your deductible to pay!
A personal loan is an unsecured loan which provides a lump sum upfront. The money is then repaid over a set term, usually two to seven years. The amount offered and the interest rate charged depends primarily on your credit profile. Borrowers with good to excellent credit have the best chance of becoming eligible and receiving low rates on a loan.
The advantage of financing with a personal loan is it offers lower rates than credits cards and requires no collateral. However, a personal loan does not provide any tax benefits, and the interest rates are often higher than those of home equity loans.
Home Equity Loan
A home equity loan or home equity line of credit (HELOC) allows you to borrow against the equity built up on your home. This is the difference between your home’s current market value and the balance you owe the mortgage company.
If you have good credit and enough equity in your home, taking a HELOC is an excellent way to get lower interest rates and longer repayment terms. Typically, you must have at least 20% home equity to qualify and can borrow 85% of your available home equity.
The most significant drawback of a HELOC is falling too far behind on your payments puts your home at risk of foreclosure. This is because your home is used as collateral for the loan. Consider this option if you have a steady income and strong credit.
You can also use your credit card to finance your roof replacement project. If you have strong credit and can secure a card offering a 0% interest promo over 12 months, you can save a significant amount of money over the financing term.
However, the downside is 0% APR credit cards usually have shorter repayment timelines than any other loan type. Also, credit cards generally come with high interest rates and a processing fee when the roofers run your payment.
Home improvement loans issued by the Federal Housing Administration (FHA) can also be used to pay for a roof replacement project which aims to make your home more valuable and livable. Banks and other lenders insured by the Department of Housing and Urban Development offer this type of financing.
Loan amounts vary depending on the credit history and the need of the homeowner. Fixed-rate FHA Title I loans and FHA 203(k) standard loans require minimum credit scores, provided your debt-to-income ratio is below 45%.
Roofing Company Financing
Roofing contractors know many homeowners don’t always have cash available to pay for a roof replacement, which is why some of them offer loans – either directly or through a partnership with a lender. The amount, rates, and terms often depend on your credit score and the roofing company.
Roofing company financing is usually better than direct lender financing. Thanks to volume lending, contractors can get special rates.
Roof Financing Through Couto Construction
Couto Construction recognizes roof replacement is an expensive and stressful investment. To help protect your home and give you the peace of mind you need, we offer a 0% no money down payment option for 6 months. If a 6-month financing term is not feasible, you can finance your roof replacement for up to 10 years, contingent on approval.We have a simple application process, convenient monthly payment options, and competitive rates. Contact us today to schedule your free inspection and learn how you can qualify for roof replacement financing with Couto Construction. We serve homeowners in Cape Cod, Southern Massachusetts, and Rhode Island.