Owning a home is the dream of nearly every American, but with homeownership comes a few drawbacks. Namely, responsibility. If something happens to your home, there is no landlord to call, it is all on you. This means that you must either make the repair yourself or pay someone to do it. For most of us, we need to turn to a contractor to make the repairs but that takes money.
If you find yourself in need of an emergency repair but are short on cash, where do you turn? You actually have more options than you think. Take a look.
Got Good Credit?
If you have good credit and you own a home, you can combine these two things to get a rather affordable home loan. What you need is a HELOC or Home Owners Line Of Credit.
A HELOC is a revolving line of credit that uses the equity in your home as collateral. These often have very low interest rates compared to other sources of funding. And, because it is not a loan, you can use this credit over and over again. Think of it as a very low-interest credit card.
To qualify for a HELOC, you need to have generally good credit, income, and employment industry. All of the same requirements that you used to obtain your home in the first place. The amount that you can actually borrow will vary from state to state but in general, you can borrow about 85 percent of the value of your home, minus what you owe. So, if your home is worth $200,000 and you owe $150,000 you can borrow$20,000. That is $170,000 (85% of home value) – $150,000 (amount you owe).
Sound like a good option for your situation? Good, now all that you have to do is find a lender but do not worry, there is no shortage of them. Lenders like Citizens Bank will be more than happy to take your application online and ideally, get you financed quickly.
Credit Not So Good?
But what if your credit has gone south since you financed your home? What should you do? Well, there are still some options out there, but honestly, they are going to cost you a lot more. What you need in this case is an online installment loan.
An online installment loan can generally get you anywhere from $1,000 to $10,000, even with less than perfect credit. Keep in mind though that interest rates will be higher than that of a HELOC. In addition, there is often an origination fee involved. The origination fee, typically for several hundred dollars, is a fee that a lender or broker charges to facilitate a loan.
To qualify for an online installment loan you do not need to have perfect credit. There are even lenders who may be able to extend you an offer with what is considered bad credit. The worse your credit rating is though, the higher your interest rate will be.
Does this sound like the option you need? Once again, there is no shortage of lenders waiting to extend you an offer. Some will be direct lenders and some will be loan matching services. Loan matching services like Paid Day Loans will merely match you with a lender. If you have poor credit and need money quickly, these matching services can often get you approved faster.
Know A Good Contractor?
One last option if you need an emergency loan for home repairs is to turn to the contractor themselves. Many good home contractors work with finance companies and can get you approved for financing. Some larger companies even offer their own in house financing.
Using financing from your contractor can be very convenient and might even get you access to special deals. Air conditioning companies, for example, are well known for interest-free deals. If your emergency is air conditioning-related, now might be the time to upgrade your system.
To qualify for financing with a contractor you will usually need to have decent but not necessarily perfect credit. This is because, in a way, your home will be used as collateral for the loan. If they do work on your home and you do not pay them, they can always place a “mechanics lien” on your home. If you ever go to sell your home, you would then have to take care of the debt in order to do so.
Should this be the option that you decide to to use, you will have to search for contractors that advertise that financing is available. Not all of them, especially the smaller ones, will offer it. Larger companies though, such as Roto-Rooter are more than willing to offer financing so that you can pay for your emergency.
Let’s Wrap Up
As you can see, there really are more ways to handle an emergency if you lack the funds to pay for it up front. Some loans are obviously better than others but the important thing is that the emergency get handled. If you have the time, try to investigate several of your options to determine what is going to be the most economical route.
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