When it comes to investing in your home, a new roof is one of the most important upgrades you can make. Not only does a new roof ensure that moisture and weather don’t seep into your attic and cause damage, but it also allows for extra sunlight to reach the rooms below.
However, as much as you might want to upgrade to a new roof, roofing projects are often quite costly and not always an option for everyone. Luckily, there are so many other ways that you can finance your new roof without breaking the bank or selling something precious.
Here we’ll explain some of the best roof financing options for your situation.
1. Home Equity Loan
A home equity loan is a type of loan that uses your home’s equity as collateral. It involves you taking out a loan against the equity in your home, which is basically the difference between the value of your home and the amount that you owe on it.
With a home equity loan, you must pay interest on the loan and make interest-only payments until the loan is paid off. The payments can be weekly or monthly across a period of a few months to a few years, depending on your terms.
You go to a lender, and they use their own money as collateral to loan you some of the equity in your home.
2. Home Equity Line of Credit
A home equity line of credit (HELOC) is basically the same thing as a home equity loan, except it’s paid back to the bank and not to you. Pretty much what you do is take some of the equity in your home and give it to the bank. You can use the money for anything you like, as long as it’s something that you can pay back eventually.
With an HELOC, you’re basically borrowing against the equity in your home like a regular home equity loan. The only difference is that you don’t have to pay it back.
A home equity line of credit (HELOC) is a type of credit line that lets you borrow money based on the equity in your home. Like a home equity loan, you go to a lender, and they loan you some of the equity in your home.
3. Cash-out Refinance
A cash-out refinance is basically exactly what it sounds like: you take out a new mortgage that basically “refinances” your old mortgage. Essentially, you pay off your old mortgage and then take out a new one based on the same amount of money, but on a much longer term or for a higher interest rate.
The Bottom Line
In the world of construction, there are so many different financing options available, that it can be time-consuming and difficult to find the right option for your finances. Thankfully, there are also some great financing options out there for those who are looking for a quick and easy way to get a new roof without taking on too much risk.
Now, it should be noted that not every roof financing option is right for every person. Some things, like a HELOC or contractor financing, are best done as a last resort.
Before you put a single nail into your new roof, make sure you understand all of the options, how they work, and what options would be best for you as pointed out in this column.