Funding Options You Can Avail for Minor Home Repairs

There are times when your home needs some fixing asap, but you don’t have enough funds to cover the expenses. During these moments, home repair loans may be the right choice for you. These funding options help homeowners, especially those working from home, manage with home repair expenses that may need immediate attention.

Home Repair Loan Options

If you need money to deal with your home repairs, here are the common funding options available for you:

• Personal Loans

Personal loans can be secured or unsecured. It is best to apply for an unsecured personal loan if you want to use it for your home repair expenses. That way, you will not risk losing any assets like your car or house if you fail to repay the loan.

Your credit score and credit history plays a significant role in determining whether you qualify for a personal loan or not. The better your credit status, the more likely you get approved with better loan offers. This means low-interest rates, considerable fees, and a convenient loan term.

• Home Equity Loans

Home equity loans are a secured type of loan. Meaning, you need to pledge collateral to qualify, in this case, your home. Moreover, the amount you can borrow is linked to your home equity. Equity is the current worth of your home minus any mortgage debt you have.

Most homeowners are limited to borrowing 85% or less of their equity in the home. Suppose your property is worth $400,000, and your mortgage balance is $300,000. You now have a $100,000 equity. This means you can borrow $85,000 maximum through a home equity loan.

• Home Equity Lines of Credit (HELOC)

A home equity line of credit has similar characteristics to a home equity loan. Just like in a home equity loan, you also need to pledge your home as collateral to qualify in this type of loan. Yet, instead of receiving a lump sum of cash, you get a line of credit. This means that this type of loan offers flexibility since you can borrow money over some time.

Homeowners are usually limited to borrowing 85% of their home equity. The lender usually sets a fixed period wherein you can borrow money from your account, also known as a draw period. If the draw period ends, you can still get a chance to renew your line of credit. In case you are unable to renew your line of credit, that means you can’t borrow under your account any longer.

Is It Right for You to Get a Home Repair Loan?

When deciding whether you should get a home repair loan, you should look at these several factors:

• What’s the money for? Review your home area or the thing from your home that needs fixing. Is it something that you can hold out? Does it need immediate attention? Do you badly need the money?
• Your current financial situation. Check your budget and make sure you can afford to repay the loan. You don’t want to put yourself in a difficult financial situation. If you don’t have enough budget and it is not an urgent repair, consider putting it off.
• The interest rates you qualify. The better the credit score, the better the loan offer. If you happen to have a bad credit score, you will most likely receive a loan offer with high-interest rates. However, there are many lenders out there that help people with bad credit. You just need to find the right lender that can help you out.

Other Alternatives Worth Considering

If the common home repair loans above are not the right choices for you, here are other ways to finance your home repairs:

• Credit Cards

If you are allowed to charge the repairs on your credit card, then why not. This will allow you to receive credit card points, cashback, or miles. However, it would help if you keep in mind that your credit utilization ratio covers 30% of your credit score. Hence, it is vital not to max out your credit card.

• Payday Loans

Some homeowners choose to get a payday loan to handle emergency home repairs. A payday loan is a type of short-term unsecured loan. This type of loan usually charges a higher interest rate but can help you get fast cash. Moreover, many online lenders offer reputable payday loans.

• Payday Alternative Loans

A payday alternative loan is available for credit union members who plan to borrow small money for minor repairs. Payday alternative loans are designed to be repaid within a few months. On top of that, you can borrow up to $1,000.

Takeaway

There are many options for you to choose from covering your home repair expenses. It will help if you pick the financing option that best suits your current financial status. Remember that the goal here is to find a way to fund your home repair expenses, not get caught in a debt cycle.

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source https://homebusinessmag.com/money/personal-finance/funding-options-avail-minor-home-repairs/