Learn About Roof Financing: 8 Options to Consider
6. Personal loan
When comparing the interest rates between a home equity loan and a personal loan for roofing repairs, keep in mind that the latter is secured by your home, while the former is not. The interest rate and origination fees, which are normally between 0% and 6% of the loan amount, can result in an annual percentage rate (APR) anywhere from 9.3% for borrowers with credit scores of 760 or higher to 22.16% for those with credit scores of 640-679.
Unsecured personal loans are given without the requirement of collateral. This is why they typically incur higher interest rates from lending institutions. Personal loans have the advantage that they are not tied to your home, so if you ever fall behind on your mortgage payments due to a personal loan, you won’t have to worry about losing your home.
7 . Contractor Money
The cost of a new roof can be defrayed in several ways, and many roofing companies have established connections with lenders and credit packages they can provide to their customers. Although it takes time to go through the credit application procedure, which can be done quickly and easily online or over the phone and can result in a range of different terms and rates depending on the contractor and your credit.
Quick-approval loans are often credit card or personal loan that is specifically designed for home remodeling purposes. Be sure to read the fine print before agreeing to the loan, and keep an eye out for any teaser rates that may be included.
If so, before the promotional period ends, find out what the new rate will be and how it will influence your monthly payments. It doesn’t hurt to apply for other personal loans to compare rates and terms if contractor financing is something you’re considering. While looking for a loan, it’s always a good idea to compare interest rates from several lenders.
8. Credit card
Credit card financing for a new roof should be considered an absolute last choice. The Federal Reserve reports that the average annual percentage rate (APR) for new credit cards is 19.33%, making it an expensive proposition to replace your credit card(s).
If you have a cheap estimate for roof repair and can pay off a significant portion of the balance within a year, financing the roof with a new credit card during its introductory 0% APR period may be a decent solution if you can’t find anything else.
Completely repaying the balance within the promotional time (usually 12 to 18 months) will result in an interest-free loan; however, any sum that is not paid off within the introductory period will be subject to the card’s standard interest rate.
