A roof replacement is a significant expenditure. For this reason, many homeowners choose to finance it. Lenders consider home improvements and renovations as worthwhile uses for credit. And so, there are several options available for homeowners who’d like to finance a roofing replacement.
Here’s an overview of some available options.
Homeowners Insurance for a roof replacement claim
If there was a storm in your area that caused roof damage, the first step is to schedule a roof inspection by a local roofing company. Local roofing companies often do roof inspections for free and can give a report of the amount of damage to give to your insurance company to file a roof claim.
Homeowners insurance is supposed to cover a roofing replacement if the roof was damaged by a covered event, such as a natural disaster, weather event, or other accident. Many insurance companies also cover siding installation, window replacement, and gutter installation if these were also impacted by a storm or weather event.
Is your homeowners’ insurance refusing to pay for a roof replacement that should be covered? Get a second opinion from another local roofing company, again since most roofing companies offer inspections for free, this should be at no additional cost to you.
Roofing warranty from previous roof installation
Most roofing products come with a warranty, either through a manufacturer warranty or the roofing company that did the roof installation workmanship warranty. If your roof fails within its lifetime, you should be able to have the manufacturer’s warranty pay for its replacement.
However, these roof warranties are usually conditional on the roof being installed, maintained, and serviced by a qualified professional.
Professional roofing labor can also come with a warranty. If the roof needs to be replaced due to shoddy work, check if the roofing installer offered a warranty on their services.
Additional Mortgage or Cash-Out Refinancing
You can borrow money with mortgage cash-out refinancing. A mortgage cash-out refinance allows you to replace your mortgage with a bigger one and then get the difference between the two in cash.
This isn’t a mortgage refinancing that simply changes the terms and agreements for an existing mortgage. It pays off your current mortgage and then replaces it with an entirely different one, that has its own terms and rates.
This financing method should only be used if you can get a new mortgage agreement that’s as favorable or better than your existing one.
Mortgage Add-On for the expense of a roof replacement
Some banks will allow you to add the cost of a roof replacement onto your existing mortgage, in exchange for cash funding.
This is a much simpler mortgage financing method since it retains your existing mortgage. You won’t need to negotiate new terms or have your mortgage term length reset.
Contact your mortgage lender to discuss this.
Home equity loan or line of credit to pay for the new roof
Another option is to borrow against your home’s equity with a home equity loan or line of credit.
A home equity loan provides you with one lump sum, while a home equity line of credit or HELOC gives you revolving access to a certain amount.
Both options typically allow you to borrow up to 85% of your equity. The main differences lie in the interest rates and overall loan costs.
A home equity loan offers fixed-rate borrowing. It’s a predictable and stable way to borrow money. A revolving HELOC typically has a variable interest rate, making the loan costs less predictable.
Federal Housing Administration or FHA Loan
FHA loans are available for first-time and lower-income homeowners who want to fix up their properties.
The FHA doesn’t have minimum credit or income requirements, so these loans can be obtained by those who don’t meet a traditional lender’s requirements. And these loans are great options for homeowners without enough equity to get a secured home equity loan or HELOC.
There are a few conditions.
- The house must have been built and occupied for longer than 90 days.
- Your debt-to-income ratio must be 45% or less.
- The proceeds must go towards specific approved purposes, such as replacing a roof.
The Federal Housing Administration offers two lending products: a Title 1 loan or a 203(k) loan.
FHA Title 1 Loan for roof installation
A Title 1 Property Improvement Loan can be used to pay for home alterations, repairs, or improvements.
The FHA offers unsecured and secured Title 1 loans. Homeowners can borrow up to $7,500 as an unsecured loan. Or up to $25,000 as a secured loan for a single-family house.
These loan terms are set at a minimum of 6 months and a maximum of 20 years and 32 days.
FHA 203(k) Loan
A 203(k) Rehabilitation Mortgage can be used to pay for repairs, improvements, or upgrades to a single-family home. An FHA 203(k) mortgage requires homeowners to borrow at least $5,000 up to a maximum of $35,000.
FHA 203(k) loans are a little more flexible than Title 1 loans because you can use these proceeds to repair your existing home or to purchase and repair a new home.
However, your property value must fall within specific mortgage limits.
Personal loan or line of credit to cover the cost of a new roof
Don’t want to put your assets up? You can finance a roof replacement by getting a personal loan or line of credit from a bank, credit union, or alternative lender.
Many banks have dedicated home improvement lending products. And several alternative lenders offer roofing loans.
Personal loans can be attractive because they’re easy to apply for, don’t require collateral, and offer quick approvals and fast pay-outs.
The downsides of these products include higher interest rates and no tax rebate benefits.
Credit Card Promotion
Feel comfortable taking on new credit card debt? Look around for new credit card deals offering 0% interest and great rewards.
This can be worth it, as long as you pay it off within the zero-interest timeframe. If you don’t, this roof financing method will cost you much more than a personal loan or secured financing.
Local roofing company financing
Some roofing companies in Minneapolis offer financing services. These financing services are ideal for homeowners who don’t want to tamper with their mortgage, get government lending products, rack up credit card debt, or get personal loans from a bank or generic.
Roof financing is available from established companies, like Midwest Roof & Solar. We help homeowners finance the cost of new roofs and repairs.
Contact us to learn more. And if that’s not what you’re interested in, we also offer friendly consultations on how to navigate the insurance and financial landscape.
Let’s talk about your options for roof installation financing
There are several ways to finance a roof replacement. The right one for you depends on your personal creditworthiness and comfort level with various lending products.
It’s a good idea to contact a professional roofer first. You can find out how much the roofing replacement will cost and if it might be eligible for insurance or warranty coverage.
At Midwest Roof & Solar, we offer free roofing inspections, free consultations, and financing for our affordable roofing services. Feel free to contact us with any questions on how to handle your insurance company, how to get a manufacturer’s warranty, and anything else.
Send us a message to schedule an appointment.
