Being short on available funds shouldn’t keep homeowners from getting a new roof when it’s really needed. Fortunately, there are many ways to pay for a roof replacement. In this blog, one of thearea’s top roofers, Hinkle Roofing, discusses the different ways a roof replacement can be financed.
Cash remains the best payment option for roof replacement, for many reasons: no need to apply for loans, it doesn’t incur interest and there won’t be future payment obligations. Paying with cash is also the most difficult to prepare for; fortunately, there are other options.
If the roofing estimate is under $15,000, credit card installments won’t be as heavy on the monthly budget, especially if zero-interest payment plans are available. Using your credit card also means you won’t have to use your home as collateral.
Also known as personal loans, unsecured loans can be an option if your roofing estimate is between $15,000 to $50,000. This type of loan does not require collateral—which is why it’s called “unsecured”—and the application process is straightforward. Unsecured loans have much longer payback periods resulting in lower monthly installments but high interest rates.
For costlier projects, like complete exterior remodels, a secured loan may be ideal. However, placing your home on collateral adds some risk. There are three types of secured loans:
Cash-Out Refinance — This involves recomputing your existing mortgage, then taking out the funds that will go toward your roof replacement costs. Note that cash-out refinancing essentially resets your mortgage payment period, which is something you should consider if you have been paying for several years.
Home Equity Loans (HEL) — HEL is like taking a second mortgage out on your home. Check the paperwork for the payment terms, as you might be required to complete payment on the principal within the first 10 to 15 years.
Home Equity Line of Credit (HELOC) — HELOC is the same as HEL, except that you get revolving open credit instead of a single large sum. This works for homeowners who are planning on several smaller projects over several years.
Many roofing contractors, ourselves included, offer financing options through partners such as Greensky and Wells Fargo. For roof emergencies and other short-notice roofing work, this is the best option. The application process is typically quick, as financing partners will usually provide feedback on eligibility within hours.