When a disaster strikes your home the last thing you want to think about is how to cover the expense of repairing the damage. But when it comes time for reconstruction to begin you don’t want to be caught off-guard. Fortunately, there are multiple options available to help prevent emergency home repairs from breaking the bank.
We often hear the questions “Will homeowners insurance cover water damage?” or “Will my insurance cover damage from a fire?”. If you have homeowners insurance, you should check with your insurance provider first to see if they will cover the costs of the repairs. If the repairs will cost less than your plan’s deductible, you may want to consider paying for the restoration out of pocket, as filing a claim could eliminate discounts applied to your policy or raise your premium moving forward.
If a home warranty was included with the purchase of your home it may cover emergency repairs to certain appliances or systems within your house. Speak to your warranty company to find out if your repairs are covered. The company will send a representative to your home to determine if the damage is within the scope of the warranty.
If you have an emergency fund built into your budget, this can provide a straightforward solution to financing your repairs. If you do have to dip into your emergency fund, you’ll want to be intentional about replenishing those savings as quickly as possible. By adjusting other areas of your budget, you can work to quickly build this fund back to the amount available before the incident.
Home Equity Loan
Home equity loans are commonly used for significant home repairs since they allow you to take out larger amounts than personal loans. This type of loan is secured against the equity you’ve built in your home and is issued in one lump sum. Typically, borrowers get a lower fixed rate since the home is being used as collateral. In order to take out a home equity loan, you must have a certain amount of equity in your home, which may not be the case if it was recently purchased.
Home Equity Line of Credit
A home equity line of credit (HELOC) is a revolving credit line. Similar to a home equity loan, it is secured by the equity you’ve built in your home. A major benefit of this type of credit is that it allows you to borrow money as needed over time (up to your credit limit) to cover the emergency repairs. With this option, you do not have to use all of credit you have available, so it can be a good fit if you’re unsure how much your emergency home repairs will cost. Typically, HELOCs have lower rates than personal loans and credit cards. One thing to keep in mind is that to qualify you must have sufficient equity in your home.
Taking out a personal loan is another option for covering emergency home repairs. Applying for this type of loan is less complicated than applying for a HELOC and has a shorter approval process. Lenders typically look at income, credit score and employment status to determine if you quality. While a convenient option, personal loans can come with relatively high interest rates, so you’ll want to be sure that the monthly payments fit your budget.
For minor emergencies a credit card can be a quick and convenient payment option. Credit card interest rates can be high though, so you’ll want to make sure you can pay off the balance swiftly before charging the repairs to your card. If you must use a credit card for emergency home repair payments, be sure to use one with the lowest possible interest rate.
Now that you know how to pay for emergency home repairs it’s time to schedule the work. If you live in Central Pennsylvania, you can turn to PRG’s emergency home repair services for trustworthy restoration. Whether your home or business has experienced fire, flooding, natural disaster, or other property damage, PRG is here to help you rebuild.