When the experts say you need a roof replacement, it can be extremely frustrating if your insurance won’t cover the cost. This can leave you in a bind – searching for another way to cover the cost of the new roof.
Fortunately, there are options other than insurance to pay for your new roof. One of the most common methods of payment is to seek financing. However, there are many types of financing you could consider, and each has its own blend of benefits and drawbacks.
When Doesn’t Insurance Cover Your Roof?
Homeowners insurance companies won’t cover the cost of a new roof in three cases. The first is when the roof has not been properly maintained. If you have allowed your roof to be damaged by debris or pooling water, then the replacement is often your responsibility.
Insurance companies also refuse to cover the cost of a new roof when the damage is caused by a non-covered peril such as flooding or earthquakes. The types of perils that are covered by the policy vary depending on the insurance company and your particular policy.
Finally, homeowners insurance policies often offer reduced or no coverage for older roofs. In most cases, roofs over 20 years old are not covered – meaning you are responsible for the entire replacement cost.
Options To Finance Your New Roof
When insurance won’t cover the cost of your roof replacement, you have two options. You could pay the entire cost out of pocket, or you could borrow the funds. The right choice for your situation depends on the amount of money you have saved and the terms of the loan you can acquire.
Many people prefer to finance the cost of their new roof, even if they have a healthy emergency fund. There are many types of loans that can be used to cover your roof replacement including a credit card, a home equity line of credit, a personal loan, or financing provided by your roofer.
Using A Credit Card to Pay for A New Roof
A credit card is often the simplest method of financing a new roof because most roofers accept credit cards as a direct form of payment. Additionally, this type of credit doesn’t typically require underwriting or a lengthy application process, which works to minimize delays in getting the roofing services you need.
While credit cards have many benefits, they also have important drawbacks. The most prominent of these is the interest rate. Credit cards currently have an average interest rate of over 24% – making them an expensive option for long-term financing.
Using a Home Equity Line of Credit for Roofing Costs
A home equity line of credit – better known as a HELOC – is another option to finance the cost of your new roof. This type of credit is secured by your home, which allows lenders to offer interest rates significantly lower than unsecured debt.
Additionally, HELOCs may offer interest-only payments for a period of time, usually ten years, called the “draw period.” You repay the balance at the end of that time over a set number of years with a fixed interest rate and monthly payment.
There are a few drawbacks to a HELOC including the qualification criteria. Generally, you can qualify to borrow up to 85% of your home’s value including your primary mortgage and HELOC if you meet the other criteria. Therefore, this type of loan may not be right if your mortgage isn’t significantly less than 85% of the value of your property.
You also need to go through underwriting in most cases to qualify for a HELOC, which could delay access to the money you need. Finally, you often owe closing costs when establishing a HELOC which can add an upfront expense to the process.
Using A Personal Loan for Roofing Costs
Personal loans are also an option to cover the costs of your new roof. They are a type of unsecured debt and therefore often have higher interest rates than HELOCs. However, the interest rate on a personal loan is generally much lower than a credit card. Also, personal loans can save you time and money upfront because they typically do not require you to go through underwriting or pay closing costs.
The biggest drawback to a personal loan is the inflexibility of payment plans. HELOCs often offer interest-only payment periods and credit cards have low minimum payments, both of which provide flexibility when repaying the principal balance. On the other hand, personal loans generally have fixed monthly payments which begin immediately after the loan is issued. Some personal loans are also subject to prepayment penalties which force you to pay an additional amount if you repay the loan more quickly than the established timeline.
Financing Through Your Local Roofers
Another – often the most convenient – option to cover the cost of your new roof is to apply for financing through your roofer. The financing programs available are often similar to personal loans with fixed payments and interest rates, but they are often specialized to meet the needs of a roofing project.
A financing program through your roofer is designed specifically for homeowners who need access to funds for home improvement projects. As such, they often offer quick approvals to help you get access to the money you need without delays. They can also offer additional benefits like freedom from prepayment penalties and unnecessary fees.
Factors To Consider When Comparing Financing Options
When comparing financing options, there are many factors that you should consider. Some of the most common are:
- Secured Vs. Unsecured Debt. Secured debt is tied to the value of an asset – like your home. It often carries a lower interest rate, but it comes with the additional risk of foreclosure or a lien on your property if you are unable to repay the loan.
- Interest Rates. The interest rate on your loan can greatly influence your monthly payments and the total cost of your loan.
- Payment Terms. Some financing options offer flexibility during repayment while others have a fixed schedule and payment amount.
- Prepayment Penalties. Certain types of loans are subject to penalties if you repay the loan more quickly than the established schedule.
- Qualification Criteria. Some types of loans require you to go through underwriting to verify your ability to repay the loan while others have more lenient qualification criteria.
- Upfront Cost. Be aware of fees and closing costs associated with various financing options.
The ideal financing option for your situation should have a manageable interest rate, an affordable upfront cost, and terms that match your planned repayment. To find this ideal scenario, discuss your desired financing terms with an experienced roofing contractor. They will have vast experience helping homeowners afford roofing services and can be a valuable resource when comparing your options.
Get Outstanding Financing Options with Complete Roofing
At Complete Roofing, we understand how frustrating it can be to secure financing for your new roof. That’s why we offer a low-cost financing program to help you cover the cost.
Our financing program offers competitive interest rates, fast approvals, and no prepayment penalties. To learn more about our financing options, contact a member of our team by selecting from our general areas below or clicking your city for express service.
Installation and Repair Services for Roofs and Gutters are available in the following locations:
- Coastal Alabama Main Office with local agents in:
- Coastal Mississippi Main Office with local agents in:
- Greater New Orleans Main Office with a local agent in: