Payment for roof replacement and roofing repairs can be handled in a number of ways with each option offering pros and cons to the home owner.
Which choice is perfect for you and your home depends on the following factors:
- The amount of funds you have on hand
- The number of hoops you’re willing to jump through to save money
- Your annual income
- Your credit rating (whether you have good credit or bad credit)
- Whether your home has roof damage caused by a major storm
We will discuss all your options in detail below.
Put Your New Roof On A Credit Card
Can I put my roof replacement on a credit card? The brief answer is yes!
Putting your new roof on a credit card can be useful if you have a card with generous rewards and incentives, especially cash-back bonuses. A new credit card offering 0% interest over 12 months, for example, allows you to place the entire project on the card then pay it off throughout the next year.
High interest rates (if you don’t have a “no interest” incentive) are important deterrents to using your credit card for roofing. If you have more loan options available (like a home equity loan), you’ll save extra money over time compared to using a higher interest credit card.
Another disadvantage of using a credit card is the processing fees charged to the roofer when they run your payment. These transaction fees can range from 3% – 5% depending on the card you’re using, which adds up to a significant amount when you’re talking about a $10,000 price tag. For this reason, almost all roofers who accept credit cards will pass these fees on to the buyer if this method is selected. However, using a credit card to finance your roof or other major home improvement project may still be optimal if there are related rewards and/or bonuses to be earned.
Use Cash or Check For A New Roof
Paying all at once with cold hard cash is absolutely the easiest and simplest way to get the job done! Not everyone has the means to pay for a new roof with 100% cash (or check), however. And even if you do have cash on hand to pay for the project in full, doing so may not be your preference.
Why is this method so simple? There’s no complicated paperwork or approval process to bother with, besides the contract with your chosen roofing company. All that’s required is a deposit, then a transfer of the balance due after the roof is installed.
Why do roofers need a deposit? Because deposits make sure that everyone is serious and on the same page about the project. Without a deposit, contractors run a risk of ordering the materials, spending time on planning, then having the homeowner ultimately back out at the last minute. Though this isn’t common, it is a considerable drain of resources for contractors large and small whenever it happens.
New Roof With Government Funded Home Improvement Loan
Want the United States government to pay for your roof? It may seem like a dream scenario, but there’s a possibility you may qualify for the FHA Title I Property Improvement Loan if you own a single-family home.
The Department of Housing and Urban Development offers these loans through pre-selected lenders. In order to qualify, there are a number of conditions you need to meet. The property must be a single-family home that has been occupied for at least 90 days.
As stated by HUD, the loan must also be used to “substantially protect or improve the basic livability or utility of the property” and “be used in conjunction with a 203(k) Rehabilitation Mortgage.”
There is no prepayment penalty on these loans. For further information, please view this page.
Personal Loan For A Roof
Are personal loans available for roofing, vinyl windows, and other home improvement projects?
Depending on approval factors which differ from lender to lender, you may be able to use a personal loan to fund your roofing project. The most common funding source for a personal loan is a bank or financial institution such as Bank of America, Chase Bank, Wells Fargo, or a local bank in your town.
If you choose this route, you’ll want to explore your options in order to save the most money in the long term. Different creditors will offer varying rates of interest and repayment terms, so it is essential to consider which factors are most important to you before you start looking for a lender. The two major factors when considering a personal loan are loan length and interest rate.
Some loans, for example, will be short term (2-6 years) while others will be long term (15+ years). Interest rates can vary from under 5% to over 20%, depending on your credit score, income, and general creditworthiness set by the lender.
Pay For New Roof With Home Equity Loan
According to the Federal Trade Commission, a home equity loan is a “loan for a fixed amount of money that is secured by your home.” These loans are repaid similar to a mortgage, with fixed payments over a set term – for example, $99/month for 10 years.
Home equity loans can be preferable if you have equity built up and if you’re looking for a non-variable and predictable payment schedule. This type of loan is desirable to many homeowners because interest rates tend to be much lower than on personal loans and loans offered through a roofing company. Unfortunately, it can’t be all sunshine and rainbows. There are notable downsides to this method of financing…
The most substantial drawback of a home equity loan is that if you fail to make payments (aka ‘default’ on the loan), the lender can foreclose on your house! This is because the collateral for the loan is your home. As you can imagine, most lenders require great credit scores and continuous income to qualify for a home equity loan. If this sounds like you, then we suggest looking into it.
And if you want to estimate how much funding may be available to you by means of a home equity loan, use this formula to calculate your available equity:
Get the current value of your home
Subtract the amount you still have to pay on your mortgage
Multiply the difference by .85
You can only borrow 85% of your available home equity by law, so if the current value of your home is $400,000 and you owe $350,000, then the outstanding amount is $50,000. Now multiply that $50,000 by .85 (to get 85%), and your available home equity is $42,500.
As you can see, the amount of funds that may be available to you through a home equity loan could be substantial. So, if you think this is a viable option, reach out to your bank or chosen lender to check current interest rates and availability.
Insurance Coverage For New Roof
One of the trickiest and most difficult means for paying for a new roof is by means of an insurance claim.
If the source of the roof damage is obvious, then it may be a bit easier (for example, if a tree falls through your roof). In this case, we recommend you do whatever possible to ensure your insurance company pays for the repair or replacement. But in less apparent circumstances, getting help from your homeowner’s insurance company can be especially challenging.
Insurance payouts for roofs that have gotten progressively worse over time can become non-viable because most homeowner insurance policies don’t cover normal “wear and tear” on any part of your home’s exterior. In these cases, insurance companies (such as Geico, Allstate, or MetLife) will usually cite the roof’s age or lack of maintenance when they deny your claim.
If you think you may be eligible for insurance to cover your roofing project, then we recommend reaching out to your insurance agent directly to talk about a potential claim. Just remember that if the exact case is not obvious, you will likely be denied.
Ask For Roof Company Financing
If you don’t have cash on hand to pay for the roof in full or any home equity available to spend on replacing your roof, then you could opt for a contractor who offers financing themselves.
Since most homeowners don’t like to pay cash for huge home improvement projects, some established roofing companies can help by offering financing directly through them or through a third-party financing vendor. Compared to home equity and personal loans, this process can be much simpler and more straightforward because most of the steps are done in-house.
Another benefit most residents don’t think about is that if a roofing company can assist you with financing, then they are much more reputable than a company who does not have access to these resources. It means that they are in good standing with their own lenders and you can place greater trust in them to do an excellent job replacing your roof!
If you’d like to finance your roof through Blue Ribbon Roofing, please reach out to us directly and we’ll be glad to help you get started on a preliminary financing application.
How Should I Pay for My New Roof?
The decision is ultimately up to you…
If you have enough cash in your bank account to adequately pay for the project in full, we suggest cash. It’ll be the simplest way, and when it’s done, it’s done.
If you have enough home equity and can secure a home equity loan from a trusted lender, then this is one of the most cost-effective options, as long as you’re okay with using your house as collateral.
If neither of the above work for you, then think about financing directly with the roofing company you choose.
Whatever you decide, know that Blue Ribbon Roofing is here to assist you. We have years of experience helping homeowners who have chosen the various methods of payment discussed above and would love the opportunity to earn your business as well. To get started on a no-obligation roofing estimate, reach out to us today!