Afford a New, Better Roof With The Best Roof Financing Options Available
If you’re in need of a new roof or a roof repair, you may be wondering who finances roofs.
The good news is that there are many financing options available to homeowners.
From traditional bank loans to government-backed programs, you have plenty of choices when it comes to financing your roof.
The average cost of a roof replacement in the US is around $7,000 with most paying between $4,700 and $10,500.
With the cost of a roof replacement in the thousands of dollars, most people do not have that kind of cash laying around forcing them to seek financing for roof replacement.
Most homeowners roof finance by taking out a personal loan or having homeowner’s insurance to cover the cost.
Other roof finance options include home equity lines of credit or home improvement loans. All of these options allow for a homeowner to spread out the cost over time.
In this comprehensive guide, we’ll explore the 16 best roof financing options, so you can make an informed decision and get the funding you need to protect your home.
So let’s dive in and find the perfect financing solution for you!
Homeowner’s Insurance Coverage
Before considering taking out a loan to roof finance, consider the money you are already paying out. Many homeowners’ insurance policies cover complete roof replacement under certain conditions.
This is likely the most common method of “financing a roof replacement.” Most homeowners’ insurance policies likely cover the cost of a roof replacement if the roof is damaged by fire, wind, or hail.
In addition, many states have a Matching Statute that requires an insurance company to replace the entire roof if the quality, color, and size of the shingles cannot be matched.
This requirement can often move you from an unmatched repair to a complete replacement.
Many homeowners think that filing an insurance claim can raise their rates. One roof-damage insurance claim will not raise your rates.
Multiple claims over a short period of time or even if you live in a high-risk area with a recent event and claims in your area can.
For the best chance of getting your insurance claim approved speak to a professional roofing company about a roof inspection and insurance claim assistance.
Personal Loans
The second most common method of financing a roof replacement is through a personal loan.
Personal loans generally come under two conditions, some that are secured by collateral and tied to existing assets of the borrower and others that are unsecured to any assets.
Unsecured loans are a bit harder to get due to the higher risk to the lender.
Personal loans are simpler and faster to obtain when money is needed for repairs needing to be done quickly.
Roof Financing For Bad Credit
Over 45% of Americans struggle with credit and have subprime scores, including homeowners, making it difficult to obtain financing when it is needed the most.
Fortunately, there are options for roof financing for bad credit. Although these loans are often accompanied with higher interest rates, if the need for a roof replacement is bad enough it may be time to bite the bullet.
On The Roof Contracting has paired with a couple of lenders who can possibly get you approved for financing a roof replacement.
Visit our Roof Finance page to learn more.
Peer to Peer Lending
If you’re in need of financing for a home improvement project like replacing a roof, Lenme can help!
Their peer-to-peer lending platform connects borrowers with financial institutions, lending businesses, and individuals.
With flexible loan terms and the potential to be funded as quickly as the next day, you’ll never have to worry about running out of cash when it comes time to pay for your roof replacement.
Cash
Not everyone has thousands of dollars stashed in their closet to fork over the cost of a roof replacement.
However, this is the cheapest way to pay for a damaged roof needing to be replaced. Obviously, there are no interest rates on installment loans to worry about.
The one downside to this option is whatever cash you invest would not be readily available for other emergencies.
Conventional Mortgage Refinances
If you have been looking for a reason to refinance your home, seeking a better interest rate, a refinance is a great option in financing for roof replacement.
You can refinance the existing mortgage for more than the current balance and keep the cash to pay for the roof.
This option does require an amount of equity that would be equal to or more than the roof replacement.
When taking advantage of this option always check for lender’s fees, interest rates, and closing costs.
Mortgage refinances can also offer larger loan amounts with fixed interest rates.
Credit Cards
The least advisable roof finance option, in most cases, is the use of credit cards. Using this option can subject you to extremely high-interest rates in some cases above 24%.
Unless you pay the balance in 30 days, using a credit card can be the costliest option available to anyone.
Now, if you are able to obtain a credit card that offers a low to zero interest rate over a period of 12 months or so, it may be a good option.
Just make sure you pay the balance before the promotional expiration date.
Credit Union Loans
If you are in need of a loan, Credit Unions often offer the most competitive rates available. However, most require you to be a member.
Luckily membership is often easily obtained by simply opening up a checking account.
If you are looking for a great roof finance option, talk to a couple of Credit Unions to see which one best fits your financial situation.
Federal, State, or Local Loans
On occasion, you can discover loans available through federal, state, or local governments.
These roof finance programs are typically offered for energy-efficient upgrades.
You can generally find these opportunities by conducting a simple internet search.
FHA Home Improvement Loan 203k
Although first created to stimulate buyers to purchase and renovate run-down houses, they can also be used to generate cash for a roof replacement on your current home.
Borrowers are able to obtain loans for up to 97.75% of the home value after the roof replacement.
The great thing about the 203K loans is that, although they have strict guidelines regarding the types of renovations, they can be your most affordable loans.
These loans can be beneficial to those with a poor credit rating but may be very time-consuming for any borrower.
FHA Refinances
All FHA are backed by the Federal Housing and therefore present less of a risk to the lenders.
Homeowners who have lower credit ratings or higher debt-to-income ratios may have a higher chance of qualifying for these programs.
You can get a fixed interest rate on an FHA to refinance, however, upfront fees and a requirement to carry monthly mortgage insurance may be a hitch in this plan.
FHA Title 1 Loans
FHA Title 1 loans are roof finance options specifically designed for homeowners who are seeking to make home improvements or repairs to their current homes.
These loans can be taken out up to $25,000. An additional benefit here is that you do not need equity in your home to qualify for this loan.
The catch here is loans over $7,500 will have to be secured by a mortgage or deed of trust.
Home Equity Lines of Credit
Home Equity Lines of Credit, also referred to as HELOCs are revolving credit lines that hold interest rates significantly lower than credit cards.
Once approved for a HELOC, you are able to draw any amount needed for repairs or replacements up to the amount you are approved for.
This roof finance option offers a draw period of usually ten years, during this period you can pull out more as you pay it off. After the loan period expires you can only pay off the balance.
Home Equity Loans
Home Equity Loans are roof finance options that are strictly based on the amount of equity you have in your home and generally max out at 80% of your home’s current market value.
Closing costs are generally lower and approval times are generally faster than home refinance loans.
One hitch here is you not be able to borrow as much and interest rates may be higher than other options.
Personal Lines of Credit
Personal Lines of Credit are similar to HELOCs where a borrower has an open credit limit to borrow from.
These personal loans are more flexible than traditional personal loans and seem more like credit cards with a lower rate.
You are approved for a maximum limit, but that does not mean that once approved you have to begin repayment.
Repayment only begins when you borrow against the limit you are approved for.
Roofing Company Payment Plans
Some roofing companies offer their own roof financing options through partnerships with third-party lenders.
Others can work with you to help secure a loan by acting as middlemen through their contacts.
In both cases, your roofing company can work with lenders to set you up for a loan keeping in mind your budget and roof replacement cost.
Many roofing companies will offer special promotions and financing to get your roof replaced within your budget.
Some roofing companies can get special rates not available to the public due to the amount of volume of lending they bring to the financial institution.
VA Refinances
VA Refinances are roof finance options that are backed by the Veterans Administration and offer veterans the ability to finance up to 100% of the value of their homes.
Using a VA refinance option could make sense for financing for roof replacement even if you have as little as 10% equity in your home.
Another benefit of the VA refinance are the fixed rates available.
Final Tips When Financing For Roof Replacements
The biggest piece of advice when applying for roof finance is that if you have the time, shop roof financing companies for the best interest rates, lowest closing costs, and other fees associated with the loan.
Be aware that lower interest rates can sometimes accompany higher fees in other areas which may make it less beneficial.
When financing roof replacements, always give yourself plenty of room for unexpected expenses.
If the wood underneath your roofing is rotted from water leakage, you may have to replace it. This is not always discoverable until the roofing is removed.
If you have an attic space let the roof inspector know so they can thoroughly inspect and damage prior to estimates being given.
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