How to Pay for a New Roof
Having a new roof installed is expensive and many homeowners wonder what the best way to pay for the roof might be. The options we discuss in this roof guide are the most common ways that homeowners pay for new roofs.
1. Home Improvement Loan
Many consumers go to their bank, credit union or other lender for a home improvement loan. These loans are usually approved on the basis of the borrower’s income and steady work history, plus their credit score. Look for a lender with low or no closing costs and competitive interest rates.
2. Home Equity Loan
These loans are often obtained to cover large expenses like a roof. They are approved on the basis of the borrower’s home equity, credit score, work stability and income. Depending on the amount of the loan and what is owed on the home, an appraisal of the home’s value may be required.
3. Credit Card
If the homeowner has enough room on the card and a loan is not an option, a credit card is often used to pay for a roof. Interest rates are almost always higher than with a conventional loan, but putting the payment on a card may be the only possibility when cash or a loan aren’t possibilities.
4. Homeowners Insurance
If you are getting a new roof because your current roof has been damaged by an event covered in your homeowners policy, insurance may cover part or all of the cost. The insurance payment will only cover the part of the roof that needs to be replaced, and it may pro-rate the payment based on the age of the roof. Check the terms of your policy for details.
If you have the cash available, it makes sense to use it for repairs not covered by insurance. You won’t be subject to finance charges and you can pay yourself back in increments as if you were making a payment on a credit card or to a lender.