Paying out of pocket for a roof replacement or significant roof repairs is often out of financial reach for most homeowners. While the national average for roof replacements is $8,600, your new roof could cost much more — as much as $45,000, depending on a variety of factors.
Of course, you’ll need to schedule a roof inspection to get a more accurate estimate.
Having said that, it’s important to understand what your options are in terms of financing roof replacement projects. Fortunately, there are plenty of options out there to meet the needs of most homeowners’ budgets.
Below we’ll cover the most common roof financing options. Read on to see which option will suit you best.
1) Homeowners Insurance
Homeowners insurance only covers roof repairs or a replacement in the event of damage caused by:
- Natural disasters
- House fires
- Bad storms
- Vandalism
- Certain types of accidents
This does not include normal wear and tear or damage due to neglect.
Therefore, if you need a new roof due to an event covered by your insurance policy, this should be your first financing option. However, you’ll still likely need to pay a certain amount out of pocket, depending on your claim and deductible.
It’s important to note that the insurance claims process for roof damage is long and can be a bit tricky. You’ll need to provide ample documentation of the damage to support your claim, and even then, it can be denied. Therefore, it’s essential that you find a reliable roofer that can support you during the claims process.
2) A Home Equity Loan or HELOC
Home equity lines of credit (HELOCs) and home equity loans are two excellent avenues for financing roofing projects for homeowners with subpar credit or who prefer to keep interest rates minimal.
A home equity loan offers a fixed amount of money in one lump sum with fixed repayment terms, while HELOCs allow you to withdraw more money over time and extend the amount of time needed to pay back the full amount. HELOCs also tend to offer less favorable terms due to their flexibility.
Both types of loans require that you have a certain amount of equity built up in your home as it will be used as collateral. The more equity you have, the more you’ll be able to reduce your interest rate for the amount you need.
Therefore, your circumstances will determine which type of loan may be the more suitable option. It’s recommended that you review your home equity options with a financial advisor first to ensure you make the right choice.
3) HUD Home Improvement and Repair Loans
If you’ve lived in your home for a minimum of 90 days and your roof absolutely needs repairs, you may be eligible for an FHA Title I Home and Property Improvement loan. FHAs are federal government-issued loans that can be obtained through private lenders.
These loans offer fixed interest rates and extended repayment terms; however, there’s no maximum interest rate, so you’ll want to shop around and compare what each lender can offer you to get the best rate and terms.
To qualify for an FHA loan, you must:
- Own the home or have a long-term lease
- Have lived in the home for at least 90 days
- Use the loan only for your roof replacement or repairs
- Have a debt-to-income ratio no higher than 45%
While FHA loans don’t require minimum credit scores or income requirements, they do require the loan to be below $7,500 if you don’t have any equity built up in your home.
4) Personal Loans
Another option for financing a roof replacement is a personal loan. As you likely know, personal loans come in many different shapes and sizes, and the most important things to consider are:
- The overall cost of the roof replacement, which will determine the size of the loan you need and the type of loan to look for.
- The interest rate you qualify for, which will determine how much more money you’ll need to repay your loan in full.
- Your credit score and credit history, which will determine the amount of money you can get and what your interest rate and monthly payments will look like.
- Your income and budget, which will determine how much of a loan you can actually afford. Keep in mind that some loans come with origination fees and late fees, and you never know what issues may crop up mid-roof replacement that will increase your overall project costs.
We would suggest a home equity loan or home equity line of credit before a personal loan if you have the equity. However, a personal loan is a good option if you have good credit and are able to meet your monthly payments — as long as you choose the personal loan option that fits into your budget.
5) Credit Cards
While we don’t recommend using credit cards for roof repair projects, they’re still a viable option that benefit homeowners with strong credit and can qualify for a 0% APR introductory rate card.
The only caveat is that you would have to be able to pay off the balance before the introductory offer expires. Otherwise, you may end up paying a higher interest rate compared to personal loans and other financing options.
6) Special Financing Through Your Roofing Company
Professional roofers understand that their invoices are high and that many homeowners are unable to pay one lump sum out of pocket. That’s why most roofing companies provide their own set of special payment options to help homeowners finance a new roof.
Of course, the special financing options offered will vary based on individual roofing companies, so you’ll need to speak with your local, trusted roofer directly to find out what options they offer.
Which Financing Option Is Right for Your Roofing Needs?
Figuring out which financing option is right for your roof replacement isn’t too difficult to figure out. It all comes down to your individual needs as a homeowner as well as what your income and budget are.
Allphase Restoration offers special financing plans to suit all types of homeowners’ budgets. We also offer free inspections, accurate estimates, and insurance claim support. Get in touch with us today to learn more about our roofing services and how we strive to work with homeowners on all home improvement projects for the best possible outcomes.
