A damaged roof can lead to costly repairs. Replacing a roof costs on average $7,336. The majority of Americans don’t have that much in savings. You will need other financing options to pay for a roof replacement without that amount of money in your bank. Here is how to pay for a new roof.
Factors that impact roof replacement costs
There are many factors that influence the cost of a roof replacement such as:
- Season: The most busy time of the year for most roofing contractors is late summer through fall. You will likely pay more if your roof is to be installed within this time period. You might find a lower price if you choose to install your roof in the winter or early spring.
- Home size: Roofers base their price on the area of your roof according to the roofing calculator. The more expensive your house is, the more you will pay.
- Materials: An asphalt roof will cost you less than metal or wood.
- Labor: Every roofing company has its own hourly labor rates. These rates can be very different.
- Disposal: A roofer may also charge a fee to provide a dumpster or rent one for the old roof.
How to save money on a new roof
These tips will help you save money on roof replacement costs by reducing the amount of your loan.
- Get quotes from several businesses before you decide to hire a roofing company. You might find a lower-cost roofer that delivers good results. However, the cost of roofing can vary from one company to another.
- Look at cheaper materials: While a metal roof may look great, it is much more expensive than other materials. An asphalt roof is a great way to save money.
- Don’t rush: Waiting until winter could help you save significant cash.
Five ways on how to pay for a new roof
Even though roof replacement can be costly, there are financing options that make it affordable. These are the five most popular options.
1. Coverage for insurance
You might be eligible to use homeowners insurance to pay for a new roof. Many insurance policies cover roof replacement or repairs if the roof is damaged by storms, fires, or theft. Your insurance company will not cover roof replacement or repair if your roof has become damaged due to age or neglect.
Talk to your agent about your policy to determine if it will cover the repairs or replacements.
2. Payment plans for roofing companies
Roofers may offer payment plans that can help lower the cost of roof replacement. This option allows you to spread your payments over a number of months, or even years. You will be charged interest on most plans. This can increase the cost of your roof replacement. Make sure you are comfortable with the monthly payments and interest rates.
Every roofer has their own requirements and plans. Talk to your chosen roofing company about what is available.
3. FHA Title I loan for home and property improvements
A Title I loan for home and property improvements is the best way to finance major roof repairs or replacements. Title I loans are administered by the Federal Housing Administration (FHA). The FHA insures them, which reduces lenders’ risk.
You can borrow up to $25,000 for a single-family residence under the Title I program. The loan is available for up to 20 years.
Keep in mind, however, that loans exceeding $7,500 must be secured either by your mortgage or deed-of-trust on the property. Lenders can seize assets if you are behind in your payments.
Banks and credit unions offer Title I loans. Each lender has its own requirements, as well as interest rates. To get the best deal, it’s a good idea to consult multiple financial institutions. To locate a Title I lender close to you, use the U.S. Department of Housing and Urban Development locator tool.
4. Home equity loan
Taking out a home equity loan is a cost-effective way to finance a new roof if you have equity in your home. The loan is secured by your home equity and you work with a bank.
Your equity in your home is the difference between its current value and what you owe on it. If you own a home worth $250,000 and owe $180,000 on your mortgage, your equity in your home is $70,000. The Federal Trade Commission states that you can usually borrow up to 85% from your home’s equity. For example, if your home equity is $70,000, you can borrow up to $59,000.
There are downsides to home equity loans. Your home equity is your collateral so falling behind on payments could have severe consequences. Your home could be at risk. You can reduce your risk by borrowing as little as you can to pay for the roof replacement and making sure that you have the monthly payment budget.
5. Personal loan
If none of the above options work, you can get a personal loan. A personal loan allows you to borrow up to $100,000 from a bank, credit union or other financial institution.
Personal loans don’t usually require collateral. This means that you don’t need to risk your home or other valuables.
Consider these downsides to personal loans.
- Less time to repay: Personal loans have a shorter term than other types of home improvements loans. You can pay off a home equity loan in as little as 20 years, while personal loans must be paid back within two to five year. This means that you will have higher monthly payments which could increase your budget.
- Higher interest rates: Although you may see personal loans with annual percentage rates (APRs as low as 2.49%), lenders reserve these rates for borrowers who have excellent credit scores or incomes. A higher rate could be offered to you if your credit score is lower than average. Bad credit can lead to a higher rate of interest, up to 199.00%.
If you have good credit and are able to afford the monthly payments, a personal loan is a smart choice. Get quotes from low-interest personal loans lenders if you feel this is the right option for you.
Choose Reggie Reed Roofing
Do you have questions about who to choose for the best roof services? Reggie Reed Roofing is a family-owned roofing company that is one of the best roof repair companies in Pinellas County. There are many services available that can be tailored to your needs such as Roof Installation, Roof Repair, Shingle Roofs, Tile Roofing, Flat/Low Slope Roofing, Metal Roofing, Emergency Roof Repair, Residential Roofing, Commercial Roofing We are proud to ensure you with the best possible St Petersburg roof repair. Reggie Reed Roofing only uses the best quality materials and skilled roofing contractors. You can count on our professional contractors to help you with any repair or restoration project.
From the initial inspection to fulfilling the basic requirements and finally to providing a free estimate for your entire project, we are always happy to help. We are here to assist you with all your roofing needs. Contact us today, and we will send over a roofing expert to help you get an estimate on a new roof and answer any other questions on how to pay for a new roof, and be sure to check out our 5-star reviews!