Thanks to the folks at Thefixitchamp.com for this blog.
How to Cover the Costs of Unexpected Home Repairs with Minimal Debt
When you own a home, the need for an expensive repair will arise — often when you least expect it. It could be a crack spreading in your foundation, a collapsed sewer, a leaking roof, or any number of other problems. But rest assured, if you own a home for long enough, the day will come when you have to pay for an emergency repair. It’s best to be prepared so that you can cover the costs and move on. Even if you can’t do that, there are ways to finance the repairs without racking up a ton of debt. If you’re a homeowner, here is some practical advice on how to pay for major home repairs and reduce your financial stress.
Understand the Repair You Need
One of the best ways to ensure your money goes a long way in a major home repair is to choose a good contractor. In order to do that, however, you must understand what kind of repairs you need done. For instance, if you’re having problems with your roof, you need to sit down and ask yourself some important questions.
Does your roof appear to be failing?
Do you see any signs of leaking?
Do your shingles look old and worn?
Are any of your shingles damaged?
Once you know the nature of the repair, you will be in a good position to select the contractor who is the best fit for the job.
Choose the Most Qualified Contractor Within Your Budget
When it’s time to pick out a contractor, it’s important to follow a few guidelines so that you don’t end up spending more money and time than necessary. Start by asking around for recommendations, and be sure to interview a few different candidates. Ask each candidate about their work experience, and if you want to be extra thorough, visit them on a job site to see their work in action. Also, make sure the candidate is licensed and insured.
For any candidates you’re still considering, ask for a bid, and compare all the bids with your budget while weighing the candidates’ qualifications. Before you sign any papers, make sure you get a contract that lays out the details of the project.
Save for a Rainy Day
The optimal method of paying for big home repairs is to hand the contractor cash and be done with it. This can be a reality if you start an emergency repair fund. Take 1 percent of your home’s value, and allocate that amount to a cash envelope in your home or savings account with your bank. If your home is valued at $550,000, for example, you would set aside $5,550 per year. This can quickly add up and at least cover a good chunk of the cost of a major repair.
Get a Home Improvement Loan
There may be an emergency repair that comes your way before you have your fund built up, and there’s still a way to pay for it without succumbing to heavy debt: taking out a personal loan. There are many types of home improvement loans available that start at under 5 percent APR. That’s a lot less expensive than the interest that comes with most credit cards. Plus, it’s easy to apply online for home improvement loans.
There’s nothing convenient about major home repairs, but they’re a reality for every homeowner. So, prepare yourself by learning what kind of repair you need done, and be selective when you’re choosing the contractor. Remember to start an emergency repair fund, and consider personal loans if you need to go the route of financing. Having a plan for unexpected repairs will go a long way in keeping your financial stress to a minimum.
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