Can You Finance a New Roof?

A damaged roof is something that you should never allow to go unaddressed. However, the issue many homeowners face when planning a roof repair project is figuring out how they will cover the costs. 

Admittedly, roof replacements are extensive and costly operations. As such, many people wonder if it’s possible to finance their new roof rather than paying out of pocket. In this article, we’ll give you a full understanding of whether financing a new roof is possible so that you can decide the best way to pay for your roofing project. 

Is Financing for a New Roof an Option?

Roof problems can appear seemingly out of nowhere, and if you’re like most people, you don’t have enough money lying around to solve these problems right away. Fortunately, there is absolutely no need to assume that you’ll need to cover your roof replacement entirely out of pocket. 

Instead, there are several financing options you should consider before you go on with this necessary project. Each option comes with its own unique features, pros, and cons, and the remainder of this article will help you understand each one. 

Financing Options for Roof Replacements

If you’ve never considered financing your new roof, you might be surprised by how many financing options there are for you to choose from. The sections below will introduce you to seven of the most popular options. 

Home Equity Loan

Our first option for financing a new roof or any other home improvement project is to apply for a home equity loan. These loans allow you to borrow a certain amount of funds based on how much equity you have built in your home through your down and mortgage payments. 

The amount you will be able to borrow varies depending on your lender’s rules and regulations and the amount of your mortgage you have paid off. In many cases, lenders will approve loan amounts up to 80% of your home’s total value minus the amount you still owe in mortgage payments. 

Using this 80% figure, let’s imagine you own a home worth $400,000, and you have paid off $200,000 through your mortgage. In this case, we can multiply your total value by .8 to get $320,000, then subtract the remaining $200,000 you owe. In this hypothetical, you’d likely get approval for a $120,000 home equity loan. 

When you get approved for a home equity loan, regardless of the amount, you’ll receive your funds in a one-time payment. You’ll then have the responsibility of paying off that loan monthly, with interest, over a term your lender sets. 

Home Equity Line of Credit

A home equity line of credit, also known as a HELOC, is another popular option for covering the costs of home repairs. Similar to a home equity loan, the amount of money you’ll have access to depends on the equity you’ve built in your home. However, the manner in which you access the funds is entirely different. 

As the name suggests, a HELOC provides you with a set credit line, similar to a typical credit card, rather than paying you in a lump sum like a home equity loan would. To cover your home repair costs, you can draw from this line of credit as many times as you need to. Additionally, you’ll only need to pay interest on the amount you’re using rather than the entire credit line. 

FHA 203(k) Renovation Loan

Our first two financing options involve negotiations with your lender. However, there are plenty of ways to finance roofing repairs without following this traditional path. For instance, the federal government offers something called a Federal Housing Administration (FHA) 203(k) loan. 

The FHA 203(k) loan gives you the opportunity to refinance your existing mortgage while also adding in your projected costs for roofing repair, as long as those repairs total more than $5,000. 

The benefit of this financing option is that it is often more accessible for those with lower credit scores. As such, the FHA 203(k) loan is often the perfect option for home repairs for those who have less than stellar credit histories. 

Fannie Mae HomeStyle Renovation Loan

Another loan option for homeowners interested in financing their roofing repairs is the Fannie Mae HomeStyle Renovation Loan. Much like the previous financing option on our list, this loan allows you to include the projected repair costs in your loan amount. 

However, unlike the previous loan option, the Fannie Mae HomeStyle Renovation Loan requires a better credit history in order for you to receive approval. Only borrowers with a credit score of 620 or higher should consider applying for this loan. 

Personal Loan

Many of the financing options on this list involve applying for loans that are specific to home repairs. However, there’s nothing stopping you from taking out a traditional personal loan to finance your new roof. 

The process for receiving a personal loan will vary greatly depending on the lender you choose. Additionally, each lender can set different rules regarding credit scores, interest rates, and much more. Still, if you are not interested in depending on your home’s equity to determine your loan amount, a personal loan can be an excellent option. 

Credit Card

Opening a new credit card is another simple way to help finance your home repair projects. However, this option is typically best suited for those who have an admirable credit history. 

Assuming that your credit rating is high enough, using a credit card for home repair financing can give you access to the necessary funds more quickly than any of the other options on this list. 

What makes this option even more alluring to some is that many credit cards include special offers and low interest rates for set introductory periods. Studying your options and making a wise choice based on your situation can help you avoid the higher interest rates that standard loans include in almost every instance. 

Financing Through Your Roofing Company

Our final roof repair financing option is one that you might not expect. Much to the surprise of many homeowners, there are plenty of roofing companies that will offer you both the service you need and the financing that will help you cover the costs. 

As is true regarding many of the financing options on our list, the details of each contractor’s financing options will vary. At times, contractors initially cover the entirety of your roofing repair costs. In other instances, they may only provide partial coverage. In either situation, you can expect your roofing company to set a fixed payment period that likely includes interest payments. 

Financing through your roofing company can be a convenient option. After all, both you and your roofer have a vested interest in moving forward with your project. This shared goal can make the approval process more expedient than other options, leading to a repaired roof in a shorter timeframe. 

Don’t Forget About Your Insurance!

Financing is not the only form of financial assistance you can get for your new roof. If you took the time to establish a homeowners insurance policy, your insurance provider will likely cover some amount of the costs depending on your policy details. 

Of course, the insurance claims process can be long and complicated, especially if you’ve never gone through it before. However, taking time to file a claim properly can ensure that the total amount you need to pay is much lower than you first expected. 

Lowering your repair costs through your insurance can also help you get approval for a loan since you’ll be requesting a lower amount from your lender. Since that’s the case, working through the claims process before settling on a financing option is the wisest approach. 

Find the Right Team for Your Roof Replacement

If you need a new roof, it’s vital to have a professional roofing team on your side that can help you through the entire process. For anyone needing roof repairs in Columbus, Ohio, or the surrounding areas, contact us at Ascent Roofing. Not only can we provide top-of-the-line repairs, but we also help with insurance claims and offer financing options for your project.