How to Finance Home Repairs

Home repairs or improvements can boost your property value and transform your living space. However, major home repairs are costly. If you don't have a savings account or disposable income, you'll need to finance the project. Fortunately, there are several options available to homeowners.

Difficulty:

Moderate

Instructions

1. Pull your credit report. Before applying for financing, check your credit score. A high credit score can help you obtain a low interest rate, which equals lower monthly payments. Order your report from Annual Credit Report (see Resources). Take steps to improve your score by paying your bills on time and paying down debt.

2. Apply for a home equity loan. Home equity loans and home equity lines of credit are available to homeowners. Your home secures the loan. Therefore, you don't need a high credit score. Contact two or three lenders, and inquire about a home equity loan to finance home repairs. Keep in mind, however, that you are putting your home at risk by doing this.

3. Refinance your mortgage loan. If you have equity in your home, consider a cash-out refinance. This involves applying for a new home loan. You can then borrowing money from your equity to pay for home repairs. Get free mortgage quotes from multiple lenders before completing an application.

4. Get a personal loan. Apply for a secured personal loan. Use the funds to complete home repairs. Secured loans require collateral such as a vehicle title, jewelry or electronics.

5. Use a credit card. Obtain a low-rate or zero percent interest credit card, and use this card to finance home repairs. Create a debt elimination plan, in which you're able to pay off the credit card within a few months.

6. Cash in a life insurance policy. Whole life insurance policies offer a death benefit. In addition, the policy increases in value over time, and you're able to withdraw a percentage of the cash value. Contact your insurance provider and use the money to pay for home repairs.

7. Obtain a government loan for home repairs. Government home improvement loans and grants are available. These programs benefit low to moderate homeowners who aren't in a position to obtain traditional financing due to insufficient income or bad credit.

8. Consider a short-term cash advance loan. If you need a few hundred dollars for an immediate home repair, skip the bank and visit your local cash advance or payday loan store. If approved, lenders deposit the money into your bank account.

Tips & Warnings

• If you have bad credit, use a co-signer. This improves your chances of getting approved for financing.

• Refinances are expensive, and you'll have to pay various fees including closing costs. Cashing in a whole life insurance policy decreases the death benefit. Cash advance loans have high interest rates, and they're generally due in two weeks.

Resources

• Annual Credit Report
• Lending Tree - Compare Loans
• Government Grants and Loans