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Paying for a big repair without making it worse
Savings, insurance, home equity, contractor financing and credit cards compared in plain English.
A failed roof or furnace rarely waits for a good month. When you have to borrow, the goal is the lowest total cost you can repay comfortably, without putting your home at extra risk.
Check these first
- Homeowners insurance, if the damage was sudden (a storm or burst pipe) rather than wear and tear
- A home warranty or manufacturer's warranty on the failed system
- Repair assistance programs, if your income or age qualifies
- Whether a smaller repair buys you time to save for a replacement
Ways to pay, compared
- Emergency savings: no interest, and the reason to rebuild that fund afterwards.
- Home equity loan or line of credit: usually lower rates, but your home is the collateral and there are closing costs. Read every fee.
- Contractor or retailer financing: convenient. "Deferred interest" promotions can charge all the interest back to day one if you don't pay in full in time. Know the difference between deferred interest and true 0% APR.
- Personal loan: fixed payments, no collateral, rates depend on credit.
- Credit card: fast, but expensive if carried for months.
Questions to ask any lender
- What's the APR and the total I'll pay over the life of the loan?
- Are there origination fees, closing costs or prepayment penalties?
- Is this a lien on my home?
- What happens if I miss a payment?
General information, not financial advice. For one-to-one help, a HUD-approved housing counseling agency offers free or low-cost advice. Affordable Home Assistance doesn't take referral fees or payments from any contractor, lender or brand.