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A Quick Guide to Paying for Costly Home Repairs and Renovations

August 12 - Posted at 11:58 AM

A Quick Guide to Paying for Costly Home Repairs and Renovations
Written by Julian Lane

The costs of home repairs vary widely — with major repairs involving the roof, foundation, electrical wiring, sewer line, and plumbing costing more than minor projects like painting a room or caulking a window. While some of these home repairs can be budgeted for or paid for with cash savings, financing options are also available to help you cover these high costs — especially in the event that you need to fix your home’s foundation, roof, siding, or HVAC system. To learn all about your different home repair financing options, read on! 

Option 1: Refinance Your Mortgage
To cover the cost of major home repairs, renovations, or replacements, you could use the equity you have in your home to qualify for a cash-out refinance. With a cash-out refinance, you’d replace your home loan with a new mortgage in a higher amount — and you’d receive the difference between the two mortgages in cash. Then, you could use the cash you receive from the refinance to fund your home repairs or renovations. 

For veterans who used a VA loan to finance the purchase of their home, a VA IRRRL (Interest Rate Reduction Refinance Loan) could be another worthwhile option to explore. Through these programs, for instance, qualifying veterans can reduce the amount of their monthly mortgage payment to free up cash for future home repairs, renovations, and other sudden expenses. Additional program benefits include low rates, a simpler application process, and a quicker closing time than most traditional refinancing options. For those in need of immediate cash, however, a VA cash-out loan is also available. 

Option 2: Apply for a Home Improvement Loan
As an alternative to refinancing your mortgage, you could apply for an improvement loan to cover the cost of any extensive repairs or renovations to your home. While your home improvement loan eligibility will depend on the size of your home improvements, equity qualifications, debt-to-income (DTI) ratio, and credit history, your loan options may include a Home Equity Line of Credit (HELOC), home equity loan, or personal loan. If you have friends, neighbors, or co-workers who have recently financed their home repairs or renovations, however, you could ask them for recommendations as you explore your financing options.
 
Option 3: Use Emergency Savings
If you have money saved in an emergency fund, you could use some or all of these savings to cover the cost of your home repairs or renovations — as this would eliminate the need to borrow money or use the equity in your home to cover these expenses. If you don’t already have an emergency savings fund that you’re contributing to each month, however, most experts recommend setting aside at least one percent of your home’s purchase price each year to cover the cost of future home repairs and maintenance costs. 

What to Consider Before Repairing Your Home
Before making any major repairs or renovations to your home, there are a few things you’ll need to consider. If you’re planning on selling your home in the near future, for instance, you may be better off listing your home in its current condition — especially if you’re at risk of foreclosure. However, working with the Robert Greene Realty team can help you to determine whether you should pay for home repairs or sell the house as is, and they can also advise you on the state of the West Volusia market and how to price your home. 

Moreover, you’ll also need to do your homework when hiring contractors to complete your home repairs — as this will help you to find the most trustworthy and reliable professionals for the job. Before hiring workers, the Better Business Bureau (BBB) recommends obtaining references, multiple quotes, written estimates, and licensing and insurance information from each contracting company in question. Once you’ve found the best professionals for the job, you can rest assured knowing your home repairs, improvements, and replacements will be completed safely, on time, and on budget.
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