aerial view of roofMost homeowners don’t want to deal with a home improvement project involving roof repair. Typically, these are less expensive, but they’re still upsetting. However, if fixing the issue isn’t possible or safe, you’ll have to focus on the roof replacement costs.

People rarely have money in a bank account, so it’s best to consider the financing options available to help pay for the project. Let’s focus on how to pay for a new roof and what to think about before using a lender or other means.

Is It Possible to Finance a New Roof?

It’s possible to finance a new roof, and there are various ways to borrow the funds necessary.

Before determining how to finance the roofing project, you should shop around to get the best deal on your loan. Research indicates that interest rates are declining as years go by. Though it might not seem like much, those slight differences could save you hundreds or thousands of dollars.

What Purpose Does Roof Flashing ServeFor example, lender one offers a loan amount of $17,000 at a 4.99 percent interest rate and a monthly payment of $274. You’ll pay $2,707 in interest! However, the second lender has a 6.99 percent interest rate and requires a payment of $290 each month. Therefore, you’ll spend $3,862 in interest!

Best Options to Help You Finance a New Roof

Though many people think the best way to handle things is to put in a claim with their homeowners’ insurance company, there could be better options. Here’s a peek at the top choices:

Personal Loans

When you take out a personal loan, it can be used for almost anything. Typically, interest rates on personal loans are much lower than on credit cards. You might only pay eight percent if you have good or excellent credit. However, the amount you can get on a personal loan will vary based on the lender, but it could go up to $50,000!

Once the roofing contractor tells you how much it will cost for the roof replacement, you can research personal loan lenders. Generally, you get personal loans from online lenders, banks, or credit unions.

Find a couple of lenders and compare options. You’ll then fill out the loan application for each one. After checking your credit history, they will tell you if you qualify for the loan, which doesn’t affect your credit score. Then, you’ll learn:

  • What the interest rate is
  • How much the monthly payment is
  • Whether they add charges, such as an origination fee

With that information, you’ll choose the best one and focus on the personal loan cost (total). Think about the total cost of your loan (APR) instead of only looking at your interest rate.

People with strong credit scores will have a wide selection of lenders. It’s best to be picky to get the best deals.

A Note About Monthly Payments

It’s important to focus on the monthly payments for your roof loan. You don’t want it to be excessive because you might have trouble paying it on time. Online loan calculators are available to help you determine the total amount you’ll pay when it will happen, and your payment.

Home Equity Loan

You can also choose a home equity loan, which is a secured loan. Your house is collateral and secured loans often have low interest rates.

Home equity loans work like standard loans. Therefore, you’ll get the funds in your account when approved, and you’ve signed the documents. Then, you repay it in monthly installments.

HELOC (Home Equity Line of Credit)

The HELOC option is a line of credit, which works similarly to a credit card. Your lender offers a specified spending limit, and you’ll borrow whatever amount you require up to the limit. Many people take it as a lump sum and then pay it back to borrow again.

With HELOC loans, your house is the collateral. They offer low-interest rates, which is great because a roof replacement and other large home improvements could become expensive.

Credit Card

If you have an excellent credit score, you might qualify for a new credit card with zero interest. Therefore, you could have up to 18 months of borrowing power without the interest charges.

For example, your new credit card has a promotional period of 18 months, and your roof replacement project will cost $17,000. If you make monthly payments of $945, you won’t ever get hit with an interest charge.

Cash-out Refinance

When interest rates are low, refinancing your existing mortgage might make more sense to get a better one. This is called cash-out refinancing because you’ll borrow more money than you currently have, getting a lump sum upfront. You can then use the money to finance the project.

Though it works when the interest rate is lower, it might not be the best choice if you already have better rates. Likewise, if the home value drops, you’re left with a loan that exceeds the place it is worth.

What to Do If You’ve Got Bad Credit

Roof damage won’t wait. Therefore, if you have an emergency and a low credit score, you might find it hard to secure a loan from a lender. However, there are some options:

  • A Secured Loan – If you can’t qualify for a traditional loan, ask the lender about using collateral. It’s called a secured loan; the collateral can be anything, such as a savings account, home, or vehicle. However, if you miss any loan payments, the lender can take the collateral to pay off the debt.
  • Loans from a Local Credit Union or Bank – Even with bad credit, your bank has information about when you make deposits and how you manage your money. Therefore, it might be willing to give you a roof loan if a lender won’t because you haven’t established a relationship with them.
  • Personal Loan for Bad Credit Borrowers – Some credible professional lenders offer fair credit loans. They typically come with a fixed interest rate, though it probably won’t be the lowest. Still, the repayment terms can be attractive and will help you get the required money.

What to Consider When You Finance a New Roof

roofer installing a new roofBorrowing money for a roofing project isn’t the same as getting funds for a destination wedding. You can’t wait to do the work until you can save enough cash. Instead, you’ve got to work quickly and make an informed decision in a short time frame. Here are a few things to focus on:

  • Have you gotten bids from a few licensed roofing companies to ensure you get the best deal?
  • Are you confident that you can make the monthly payment so that you don’t risk the collateral you’ve used?
  • Can you use some of your emergency funds for the project to save money?

A new roof isn’t usually exciting for homeowners because they can’t see it like a hot tub or kitchen countertop. However, it’s crucial because it protects people’s possessions and helps them live comfortably.

Are you thinking of getting a roof replacement or repair? It’s wise to check out the lenders available in Austin, TX, to see how they can help you. Likewise, you learned of other options.

When you’re ready for the project to start, call Water Damage & Roofing Austin at (512) 820-6505 or use the contact form to request a free estimate.

FAQs About Roof Financing

What Credit Score Do You Need for a New Roof?

roofer inspecting a roofThe credit score requirements can vary based on the roof loan you need and your preferred lender. Typically, personal loans require 670, but specific lenders might help you if you score 580.

How Much Does It Cost to Replace a Roof?

roofer inspecting a roofIf a roof repair isn’t enough, and you need a complete replacement, it will cost about $5,000 on average. However, that price can go much higher if you want expensive materials or have significant damage.

Why Is a New Roof a Good Investment?

roofer inspecting a roofInvesting in a new roof might increase your home’s value because it will improve energy efficiency, functionality, curb appeal, and stability. You’ll still benefit even if you’re not planning to sell your house!

How Much Is a New Roof in Austin?

roofer inspecting a roofTypically, a new roof will cost about $10,000 on average. However, if you choose expensive roofing materials, it might be closer to $34,000.