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The adage “saving for a rainy day,” was no doubt coined by a homeowner with a leaking roof. If your home in Pinellas County, Florida, is experiencing a leak, you may be considering financing vs a home equity loan for your roofing project. Here’s a look at financing options available to you.
Paying out of pocket for a new roof is unrealistic for many homeowners, especially if their roof was unexpectedly damaged by a weather event. Nationwide, roof replacement costs range from $5,569 to $11,415 and the average cost is $8,349 for an asphalt shingle roof, according to HomeAdvisor, a home repair website.
Before you start exploring financing options, contact the team at Classic Roofing & Construction for a roof inspection. If your roof was damaged by a weather event, your homeowner’s insurance may cover the cost to repair or replace your roof. While most policies don’t cover normal wear and tear, they will cover sudden damages. We always encourage our clients to read and understand their insurance policies, to know exactly what is covered and what isn’t.
Key Financial Variables
Whenever you’re dealing with financial options, your financial status will be judged, starting with your credit score. The score reflects your borrowing and repayment history, and it will affect any loan you receive. Here are key loan terms to help you compare financing options:
- A loan repayment period refers to the amount of time (in months or years) that you have to repay the loan.
- Maximums are the maximum amount of money you are approved to borrow.
- Monthly payments are the amount you pay monthly until you pay off the loan and interest.
- The annual percentage rate or APR is the interest the lender is charging on your loan balance each month, and it may include additional charges besides interest. The higher the APR, the more it will cost you. So interest rates are a good place to start when comparing lenders.
- Fixed-rate loans have the same APR over the life of the loan, so your payment will be the same each month.
- Variable interest rates (also called adjustable or floating rate) is an interest rate on a loan or security that fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically with the market. The advantage being if the underlying interest rate declines, the borrower’s interest rate payments also decline. Conversely, if the underlying index rises, interest payments also increase.
Financing Through Classic Roofing & Construction
The team at Classic Roofing & Construction has partnered with GreenSky, a Goldman Sachs Company, and Mosiac, a company that specializes in financing clean energy. Together, these two companies can be counted on to offer fast and flexible financing for solar roofing and conventional roof replacement and repairs.
Roofing projects usually can’t wait, so timeliness is a big factor when comparing financing vs home equity loan. Our financing application is easy and funding is available immediately. Financing options include traditional loans and zero-interest loans, including the popular 0% APR 36-month loan. For those who plan to pay off their loan within three years, this zero-interest rate loan is a unique opportunity to keep those interest costs in your bank account.
Personal loans are not secured by collateral. If you choose a personal loan to finance a roof, you can expect high interest rates and higher loan origination fees. Your interest rate and monthly payments will vary depending on your credit score. One advantage of personal loans is that they can be obtained quickly. Another advantage is that if you are unable to keep up with the monthly payments, you will not be putting your home at risk.
Home Equity Loan
You will likely be able to get a lower interest rate for your roof repair or replacement when choosing a home equity loan, which uses your home as collateral. If you have a lot of equity in your home, and a strong credit rating, you will likely obtain a lower interest rate. The downside is the approval process can take weeks, and failure to pay the monthly payments for whatever reason will put you at risk of losing your home.
Home Equity Line of Credit or HELOC
Another way to finance a new roof is through a home equity line of credit. HELOCs are similar to home equity loans because both use your home as collateral. The difference is that instead of borrowing the entire loan amount in a lump sum, a home equity line of credit allows you to borrow only as much money as you need at a time. This roof financing option is similar to using a credit card. A home equity line of credit usually has a lower variable interest rate than a home equity loan, but it is harder to predict the final cost of their roofing financing option because the interest rate can rise and fall. With interest rates and inflation rates recently climbing, this may not be the best option, given current market conditions.
When mortgage rates are low, a cash-out refinance can be a great way to finance a new roof. With this type financing, you replace your current mortgage with a new larger loan amount that covers the remainder of your loan, plus your roof replacement cost. You can also include other home improvement projects along with your roof replacement project. Once the work is completed, you end up with one mortgage payment. Current rates of financing for a 30-year fixed refinance are at 6.37 percent.
If you have excellent credit, you may be able to obtain a 0% APR credit card for up to 12 or 18 months. But after that 12- or 18-month grace period, these credit cards usually have very high interest rates that can accumulate debt quickly. By the time the new roof is paid off on your credit card, you could end up more than doubling or tripling the cost of financing your roofing project.
HUD Home Improvement and Repair Loan
Some homeowners who don’t have enough equity to borrow against their home may be eligible to pay for a roof repair or replacement with an FHA Title 1 home and property improvement loan — even with a low credit score. These loans are only offered by FHA-approved lenders. These fixed-interest loans have generous repayment terms. One caveat is that homeowners have to live in the home for at least 90 days before they can be eligible for an FHA Title 1 loan.
Learn More About Financing vs a Home Equity Loan
If you are not certain which financing option is right for your situation, contact the team at Classic Roofing & Construction. We have helped hundreds of homeowners in Pinellas County obtain trustworthy loan services. Our team members all live and work in the communities we serve. We treat you like neighbors. Schedule a free estimate or call for a consultation. Call 727-329-8023 in Tampa or 239-932-5225 in Fort Myers. We can help you decide on financing vs a home equity loan when it comes to your roofing project.