For many homeowners, the substantially reduced interest rates given by these loans make them a better option than both personal loans and loans offered by roofing companies. Everything can’t be happy and rainbows. Several drawbacks accompany this form of financing. The biggest negative of a home equity loan is the potential for foreclosure should you fail to make payments (i.e., “default”) on loan. This is because your home will be used as collateral for the loan.
To get approved for a home equity loan, you’ll need a high credit score and proof of stable income. If this describes you, we advise researching it more. In addition, you may use this method to rapidly estimate how much money you could borrow via a home equity loan:
The formula is as follows: Take the current market worth of your home; Deduct the amount you have left to pay on your mortgage; Multiply the resulting number by 0.85%
By law, a homeowner can only borrow up to 85% of their property’s equity. If you owe $350,000 on a home that is currently worth $400,000, your accessible equity is $50,000. Multiplying your $50,000 loan by 0.8 (50% to 85%) gives you a total of $42,500 in equity.
In this way, you may understand the potential size of the financial resources made possible by a home equity loan. Reach out to your bank or preferred lender to inquire about interest rates and availability if you’re interested in exploring this possibility.
Covered by Insurance
Insurance claims can be one of the trickiest and most time-consuming ways to cover the cost of a roof replacement. If the leaky roof’s origin can be easily pinpointed, things might get easier.
Take the case of a tree crashing through your ceiling. To ensure that your insurance provider covers the cost of the repair or replacement, you should take all the necessary steps. Nonetheless, it can be difficult to seek assistance from a homeowner’s insurance carrier in less obvious situations.
Most homeowner insurance policies do not cover regular “wear and tear” on any portion of your home’s exterior, including the roof, making it impossible to collect on a claim for a roof that has deteriorated over time. When deciding whether or not to pay out on a claim, insurance companies like Geico, Allstate, and MetLife sometimes point to the roof’s age or lack of upkeep as the reason.
We suggest contacting your insurance provider directly to discuss a possible claim if you believe you may be qualified for insurance coverage for your roofing project. Keep in mind that you are more likely to be turned down if the details of your case are unclear.