I like helping people regardless of their financial situation. Sometimes last minute emergencies or other expenses come up (like financing a roof replacement) when you are in a bind. Here are several ways for financing a roof replacement with bad credit.
Financing a Roof Replacement with Bad Credit: What Are Your Options?
If you recently made a house purchase, you’ve officially opened the doors to a whole new avenue of expenses. If your credit score is excellent, it is easy to qualify for an urgent low-interest personal loan (if you don’t already have an emergency fund) to fix your roof.
This really shows the importance of having an emergency fund. You need a ready to go cash to help fund upcoming large purchases.
However, not everyone has the luxury of a large emergency fund or excellent credit. But what about financing a roof replacement with bad credit?
A roofing problem can’t wait because a seemingly small problem like faulty flashing, a leak, a mildew problem on your wooden shakes, or a lifted shingle can eventually become a significant issue if left unattended.
If you don’t have the emergency cash to sort a roofing problem out immediately, then its best to look for personal roofing lenders.
The condition of your home is only a small portion of the risks associated with real estate. Here are several other real estate risks to consider.
Personal home improvement can be expensive. There are options that can buy you time if you are out of options for purchasing the roof replacement upfront.
Financing Options for Financing a Roof Replacement with Bad Credit
Oftentimes, people think they are out of luck with financing options with bad credit. That is simply not true. Actually, if you have bad credit then proof of repayment on your roof financing can be a way to turn your credit around.
If you are wondering how to finance roof replacement with bad credit, there are financing options that you can consider:
Check with your homeowners’ insurance policy
The first option may be to check with your homeowners’ insurance policy. Your insurance cover may help finance your roofs damage if it’s as a result of an act of nature like a storm or if it’s by fire.
However, the cover excludes damage caused by natural wear and tear or lack of maintenance.
You should first consider your policy details or contact your insurance company to find out information on any exclusion, coverage limitations, and more.
You may still need to pay for a few things with cash even when you have coverage from homeowners insurance. For example, you may have to cater for a deductible fee before your coverage kicks in.
So, if you don’t have any cash savings, loan financing can be your next best bet. There are many options for home improvement loans, so let’s get into it.
Personal roofing loans
A personal loan is yet another roof financing option that you can consider. Personal loans are best fit for significant roofing repairs and can finance your project when you need over $2,000 to complete the work.
If you want to replace a roof completely, it can cost as much as $10,000 or more, and so a personal loan may be the best option. It allows you to replace the roof and then make monthly payments for the total cost of the roof repair.
Features of Personal Roofing Loans
Some of the most common features of personal roofing loans include:
- No home equity requirement: Personal roofing loans are also known as zero equity home improvement loans since, if you are unable to repay because you are sick or have lost your job, then you won’t be at risk of foreclosure. However, personal roof loans possess higher interest rates compared to options secured by your home equity.
- Best for projects under $35,000: An individual with an excellent credit score, little debt, and a high income, may be able to get a roof financing loan of up to $100,000 through a personal loan.
- Rapid funding: Roofing problems need urgent attention and often require fast financing. A personal roofing loan may be your best option because it offers instant financing. Personal loan providers approve a roofing loan and then transfer the funds to you in as soon as 24 hours.
- No prepayment penalties: Most lenders don’t charge a penalty fee for paying back your loan ahead of schedule. If you can raise more income before the maturity date, you can use it to pay off the loan quickly. Make sure you don’t have a prepayment penalty.
- Fixed monthly payments: The monthly payments don’t change since personal loans have set interest rates. Fixed monthly payments can help you budget accurately for your project
Important Factors that Lenders Consider
There’s a lot that goes into the approval of a loan. A lot more than what you traditionally think. Some of the crucial factors that lenders consider to determine if you qualify for a personal loan include:
- Credit score
If you want to finance a roof replacement, bad credit score poses a considerable barrier for you. Personal loans don’t use home equity, and so lenders use the credit score to determine the borrowers’ ability to repay the loan. A better credit score qualifies you for a loan with lower interest rates. To be eligible for a personal loan you will likely need a good credit score of 640 and above.
However, you can still find a few financing options that offer flexible payment plans for clients with less than average credit score. Some lenders provide roof replacement loans with a credit score as low as 580.
It means you can still qualify for necessary financing from specific roofing companies. If you are replacing a roof with bad credit, check with the different roofing companies to find out whether they have a suitable option for you.
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A majority of personal loan lenders want to know if your income can be able to afford to repay the monthly payments. After the pre-qualification process, you may be required to submit some income verification forms such as a W-2.
Manage your income for free with Personal Capital to ensure that you will qualify before submitting an application.
- Current debt
If you have more debt obligations currently, most lenders assume that it will be a lot tougher for you to afford the monthly payments. Lenders consider the ratio of your debt to your income to decide whether to approve you for a loan or not.
Pros of personal roofing loans
There are plenty of pros to personal roofing loans when you are trying to finance a roof replacement with bad credit.
- Fixed and predictable monthly roof repair payment plan can help you budget precisely for your roof repair or replacement project.
- Loan term of between 3 and 7 years helps you get lower monthly payments to fit your budget.
- Most lenders have a secure online application and approval process that usually takes less than 24 hours.
- Fast funding which is generally 1 to 10 days means that you can get your roofing project completed right away.
- No hidden fees since you only pay for the loan origination fee and if you want to clear your credit earlier than scheduled, there is no prepayment penalty.
With these personal roof or home improvement loans, you can potentially refinance these loans down the road. Evaluate that option if the interest rate is lower on a refinancing.
Cons of personal roof loans
With every upside consideration, there has to be at least some cons. Here are some of the cons of using a personal roof loan for a roof replacement.
- A majority of lenders look for a credit score of 640 or higher to be eligible, although some lenders may offer personal home improvement loans if your credit is above 580.
- Interest rates on personal roofing loans for bad credit are higher than loans for homeowners with good credit.
Now that you know all the details of personal roof loans as an option for financing a roof replacement with bad credit. Let’s get back into another option for financing.
Home improvement credit cards for financing a roof replacement with bad credit
Sometimes you want to save cash or take some time first to improve your bad credit score before you consider financing a roof replacement. But it could be tricky because roof repairs can’t wait.
If you have an emergency roof replacement, bad credit shouldn’t hinder you. Using a home improvement credit card may be another financing option. If you have bad credit, finance your roof with home improvement credit cards for roofing repair.
Be sure to develop a payment plan to pay down the card as quickly as possible because interest rates can increase rapidly.
Credit cards are most suitable when you want a small amount of cash – usually of less than $1,500 – and when you can pay it back quickly – in a year or less.
Pros of Home Improvement Credit Cards
Here are some of the pros of home improvement credit cards for financing a roof replacement.
- Quick application and funding process and once approved, you can receive your card in less than ten days.
- Convenient and easy to access when you need to purchase any additional materials or supplies for your roofing project.
- No application or origination fees, although sometimes, you may have to pay an annual fee to keep your credit card account open.
Cons of Home Improvement Credit Cards
Here are some of the cons of home improvement credit cards for financing a roof replacement.
- Higher interest rate than all the other options for financing a roof replacement with bad credit and in some cases can attract up to 20% APR or higher.
- Monthly payments fluctuate based on your balance which makes it hard to create a budget for it.
It’s vital to also keep in mind that some roofing contractors may add a 3% to 5% surcharge to your roofing project to cater for the costs associated with accepting the use of credit cards.
So, inquire about that before you opt for the credit card as an option for financing a roof replacement with bad credit. There are some other credit cards to consider getting if you want to maximize your cash back or rewards points during the process.
Conclusion on Financing a Roof Replacement with Bad Credit
The financing options listed above for financing a roof replacement with bad credit can help you fix a roof problem even when your credit is severely damaged.
You may, however, need to review your family budget, set limits for your roofing project, avoid using the money for anything else except the roof replacement project and find ways to increase your repayments so you can clear the debt as quick as possible.
If you can wait and try to increase income or save, I would recommend that. Here are some ways to make $500 fast.
Or, you can try to flips things for profit.
Would you consider using a home improvement loan? What are some other options for financing a roof replacement with bad credit? Please let me know in the comments below. I’d love to hear from you.
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I own my home outright, taxes are paid. Home needs a complete roof replacement. Problem is my credit . Was listed as a authorized user on someones accounts. Person died. Now My credit report shows these issues, have letter which state I am not legally responsible for these debts. Still might be a problem. Would like to save money for my golden years . Any suggestions ? Your site was very helpful.