How to Pay for Unexpected Home Repairs and Remodeling
Not all home repairs or remodeling are planned and expected. System failures can happen when you least expect them, leading to a roof repair, home rewiring, or another expensive upgrade you never expected to need quite yet.
While proceeding with these repairs and upgrades can offer peace of mind, there’s still the matter of cost. Figuring out how to pay for unexpected home repairs can be stressful, but you may like to explore some of these options:
An Open Loan
Your first question might be, ‘What is an open loan?’ However, you’ll soon see why it’s preferred by many homeowners undertaking home repairs. An open loan is a financial arrangement in which you can borrow, repay, and borrow from a revolving pool of funds with no fixed end date. A credit card and a home equity line of credit are two popular open loan options that homeowners explore.
If you anticipate needing to carry out more than one repair or renovation, but over an extended period, an open loan can be a convenient option. Rather than applying for one large loan that you may not need all of, you can borrow funds as you need them and continually pay them down to stay on top of repayments. There’s only one set of paperwork for establishing an open loan, rather than several sets if you were to request one traditional loan after another.
A Payday Loan
If you have a small but urgent issue that you need to resolve, such as a broken window that’s letting the weather into your home, a payday loan may be a worthwhile option to explore. A payday loan is a short-term loan for a small amount that covers immediate needs until your next paycheck. It can be the lifeline many homeowners need when they encounter an unexpected cash flow issue at the wrong time, when home repairs can’t wait.
Homeowners’ Insurance
In some cases, you won’t need to pay for the damage that affects your home. If it’s sudden, accidental damage, your homeowners’ insurance may cover it. Review your policy to confirm, then file a claim. You may need to pay a deductible, but you won’t need to cover the full cost.
It’s important to note that while homeowners’ insurance often covers damage from sudden events, it generally doesn’t cover routine wear and tear and maintenance neglect. For example, insurance typically won’t cover a roof leak if poor roof maintenance was to blame.
Government Help and Loans
While the government won’t give you free money to fix your home, they do have programs that make it easier for many Americans to access funds they may not have been eligible for through traditional lenders.
Eligibility for home repair and improvement assistance through the Department of Housing and Urban Development (HUD) depends on your age, income level, property type, and location. Some programs are also explicitly available to Native Americans, veterans and service members, and rural residents. The goal is to ensure essential repairs can be carried out to minimize health hazards and maximize safety.
Friends and Family
It’s often not a preferred option, but many people borrow money from loved ones when they find themselves in short-term financial trouble due to an urgent home problem. If you have a family member or friend who is willing to help, it can relieve a great deal of stress.
However, for peace of mind for both parties, consider creating a payment schedule. This can add transparency and reduce the risk of miscommunication that could lead to disagreements.
Side Hustles
If you’re in the challenging position of not being able to comfortably cover the costs of a major home repair, such as a plumbing repair or water damage from a failed water heater, think about side hustles that you may be able to perform short-term to earn extra cash.
Ride share and delivery services are often looking for drivers, and you’re able to choose the hours that work for you. If you have digital skills, you could also secure short-term contracts for online work like data entry, graphic design, and web development.
The extra money you earn around your regular job can be helpful if you need to make home repair loan payments over a fixed period.
Cash-Out Refinance
If you have equity in your home and need substantial funds for an unexpected major home remodel, discuss a cash-out refinance with your lender. A cash-out refinance involves withdrawing the difference between your mortgage and your home’s worth, replacing your mortgage with a larger one. Many people who are undertaking extensive home renovations, such as kitchen and bathroom remodeling, prefer this option due to its lower interest rate.
You always expect to maintain your home, but you don’t always expect a large bill for an emergency repair. When the worst happens and you need to quickly undertake a home remodel for safety and health reasons, you’ll enjoy peace of mind knowing you have options. Explore an open loan, learn more about side hustles, or ask loved ones for help. Learn more about each option to make an informed decision.
