Getting a home is a big investment, and once you are settled, you might be tempted to think that the only costs along the way will be for the mortgage. However, you will also face repairs along the way, and if you haven’t budgeted accordingly, you might end up with a major repair that you don’t have the funds for. The good news is there are ways to help cover the costs.
Taking Out a Home Equity Line of Credit
This is a type of loan that uses your home’s value as collateral. You can think of it in the same way you think of credit cards since there is a set limit you can borrow against your home. You will often have about 10 years where you can borrow from the fund, and you will often receive up to 20 years to pay back. If you are thinking of going this route, you can review a guide that goes over the entire process of taking out a home equity line of credit.
The process offers several advantages when it comes to paying for your home repairs. For example, you might not have to pay back as much interest as you would with other types of loans. A lender considers this to be less risky than other types of loans since your home is the collateral. If you got a mortgage, you would have already shown that you were able to pay back the amount that your home was worth. Just make sure you do your research since your home could be at risk if you are unable to pay the funds back on time.
Putting it on a Credit Card
You can easily use a credit card when you have a major repair, and that’s an especially good option if you already have a fairly high limit for borrowing. However, if you don’t you will probably still be able to apply for a new card and get one to use for these repairs. Still, a credit card might not always be the best option. While it can be convenient, the interest rates can be extremely high if you don’t pay it off as soon as you can. Plus, you likely won’t get the longest time to pay back the funds. You might want to look into every other option first.
You might want to look into getting a personal loan to do your repairs. These loans differ than others you might be familiar a veteran loan or auto loan. They often have higher interest rates, but if you need something in a hurry, you could choose this as a last resort. The repayment periods are often shorter, but there is the flexibility to use it as you need to. Check with the bank to determine the repayment terms you will likely need to work with. You can also look at other lenders to see what your options are. If you can get the right terms and rates, you might want to consider this as a viable way to finance your repairs.