Unexpected home repairs can stretch your budget beyond its limits, leaving you wondering how to finance emergency fixes. The good news is that you have financial options to pay for home repairs while protecting your hard-earned savings. Two financial resources you could tap into for repairs are home insurance and loans. Discover your ideal financial strategy for funding home repairs.
Counting the Costs of Home Repairs
Before pursuing funds for your home repairs, you need an accurate estimate of the costs. Having realistic expectations of how much you may need to spend can help you decide on the best financial strategy. Costs will vary depending on the extent of damage and the going rate among repair businesses in your area, but here are some typical price ranges for common repairs:
- Water damage: Average water damage repair costs are between $1,300 and $5,600, though extensive damage can lead to some of the most expensive home repairs, up to $100,000.
- Fire damage: Fire and smoke damage often require professional repairs that cost between $3,200 and $25,000, though extensive repairs can cost up to $93,000.
- Storm damage: Weather events can inflict damage that cost between $2,300 and $14,540 to repair.
- Roof repairs: Repairing your roof costs around $1,150 on average but up to $8,000 for more extensive repairs.
- Siding repairs: Damaged siding typically costs $5,400-$15,500 to repair, depending on the price of the siding materials.
- Foundation repairs: On average, fixing foundation problems costs around $4,500, though extensive repairs could cost $7,000 or more.
- HVAC repairs: If your heating, ventilation, and air conditioning (HVAC) system breaks down, expect to pay around $10,000 to get a complex system running again.
- Termite damage: If termites eat through wooden walls and floors, repairs can cost between $200 and $2,500, depending on the extent of the damage.
How to Pay for Home Repairs With Insurance
Depending on your policy and the damage, filing a home insurance claim could help cover your repair costs. Here's what you need to consider when deciding whether to file a claim for home repairs:
- Urgency: If your repair is a true emergency, you may not have time to go through the claims process and wait for a payout. For example, extensive water damage must be addressed immediately to prevent mold, which is a serious health hazard and can spread. If you need to pay for an immediate repair, you may need to consider emergency home repair loans instead.
- Extent of coverage: Confirm whether your home insurance policy covers the repair you need. If it does cover some or all the damage, filing a claim could be an option.
- Deductible: Check the deductible amount you'd need to pay when claiming under your policy. This is the amount you need to contribute out-of-pocket to get the payout. If it's too steep to afford right now, you may need to look elsewhere for funds. Likewise, if the deductible costs more than the repair you need, other options could make more sense.
- Impact on premiums: Frequent or large insurance claims may prompt your insurer to increase your premiums, so consider this when deciding whether to claim.
Loans and Credit for Home Repairs
When you need to pay for urgent repairs, a loan can provide more flexibility than a home insurance claim. If your policy doesn't cover the damage, the deductible is too high, or you need money to pay for repairs right away, consider these loan and credit options:
- Credit cards: Paying for home repairs on a credit card can be a convenient option, especially if you have a good credit score and expect to be able to pay off the amount on time. However, if affording your credit card bills will be challenging, it may be best to avoid this expensive form of debt. The interest on an outstanding credit balance can rack up quickly if the amount is too large for you to repay in a month or two.
- Home equity loans: You may be able to borrow against your home equity — the portion of your home's market value you've already paid off from your mortgage. Many lenders have a minimum they're willing to lend against home equity, so this could be an option for expensive repairs. The interest will be more affordable than credit card debt, but be sure you can repay your home equity loan to avoid the lender foreclosing if you default.
- Personal loans: Depending on your lender, the interest on a personal loan is usually more affordable than credit card debt. Obtaining one is also simpler and faster than applying for a home equity loan, and you won't have to use your home as collateral. This makes personal loans an excellent option for financing emergency home repairs. Provided you can show your ability to repay it, you could get approved for a personal loan to cover your home repairs.
Combining Insurance and a Loan to Pay for Expensive Home Repairs
In some circumstances, you can combine home insurance and a loan to cover repairs. This is only an option if your home insurance policy covers the repair you need.
For example, if you don't have the cash on hand to pay your deductible, you could use a personal loan to pay for the deductible so you can make an insurance claim to fund the rest of the repair costs. If the fix is expensive and insurance can pay out on time, this could help you afford your repairs while limiting the amount you need to repay.
If the repairs you need are too urgent to wait for insurance to pay out, you could get a personal loan large enough to cover the repairs and your insurance deductible. Then, you can:
- Pay for the repairs with the funds you've borrowed.
- File your insurance claim.
- Pay the deductible.
- Repay your loan after your insurance pays out.
Before taking this route, ensure you understand your insurance terms and factor in the interest on your personal loan.
Depending on how much your repairs will cost and how urgent they are, you might be best off combining home insurance and a personal loan if your policy covers the repairs. If it doesn't, you can opt for a personal loan alone.
Cover Your Home Repairs With a Personal Loan From Atlas Credit
Whether you're using it alone or combined with home insurance, a personal loan is a convenient option to cover unexpected home repair costs. If you need money for an urgent fix, Atlas Credit offers a quick and simple online application process. After approval and electronically signing the loan agreement, you could receive your loan funds as soon as the next business day.
Apply for a personal loan from Atlas Credit today and get the home repairs you need.
