Other Options to Finance Your Roof
Home equity loan
A home equity loan or a line of credit, is a great option to finance your roof using the value of your home. This is effectively a second mortgage on your home with the big benefit of a fixed interest rate that is way below your credit card rates. However, there is a risk – if you don’t keep up with the payments you could lose your home.
Cash-out refinancing is another financing solution for your roof. Essentially you’ll refinance the mortgage you have now and get a lower rate of interest. The difference is you take a out higher dollar amount closer to the current value of your home. The old mortgage is paid off and the difference goes to you, which you can use to pay for your new roof. It’s better than a home equity loan because you do not have two notes.
However, it takes a little longer because all of the information that was recorded for the original mortgage has to be updated and re-recorded.
FHA Title I loan
What if you don’t have enough equity in your home to borrow against? The next best best choice might be an FHA Title 1 Loan . These loans are designed to fund the cost of home improvements and repairs to increase the value of your home and make it more livable. A new roof would fall under this category.
Qualifications are pretty easy in terms of income, debt ratios and other standard loan requirements and this type of loan is only issued by authorized FHA lenders. It’s worth mentioning that if the loan exceeds $7,500 it must be secured (recorded) as a deed of trust or your mortgage.
If you only had bad options available, a personal loan would top the list as your best worst option. High interest is a concern but if your only other option is a credit card, a personal loan will have a lower payment. The reason a personal loan carries interest almost as high as a credit card is because there is no security for the lender. They are lending to you based on your credit score and that’s it. The good news is you can still negotiate a rate lower than normal if you have a credit score that is better than average.
We have finally come to the worst option available among all roof financing options. According to the Federal Reserve, the average APR on a credit card is 16.46%, which means that if you finance $10,000 your payment will be about $350 over a payoff term of 36 months.
However, if your roof repair is relatively low, you could transfer the balance of your card to a new account with an introductory rate of 0%. Offers like these generally last for about 15 months. So a repair of $5000 would cost you $333 over 15 payments. This is not such a bad deal, even if your new bank charges you a transfer fee of 3%, which is on the high side for these types of fees.
Bottom Lining Roof Finance Options
If you are buying a home that is not new construction, the home will be inspected by a certified home inspector. Make sure you ask the inspector about the roof. If you know the house if 10 years old and you have a 20 year roof, it’s reasonable to think you’ve got 10 years of life on the roof in your favor. However, weather conditions play a big role in the life of your roof so your inspector can tell you a lot.
Even so, if you don’t have options to finance a roof, especially when you least expect it, you could be left out in the cold. CTI Roofing offers financing partners such as Green Sky Lending. Ask your roofing specialist about your options and schedule an inspection as soon as possible if you suspect the life of your roof is running short.