iQuanti: Everything about a home, from the infrastructure to the equipment that's inside, unfortunately has a limited life expectancy. On top of that, nasty weather and other unforeseen factors can also threaten damage. If something happens to your house, emergency loans can be used to help combat the situation. Here are five steps homeowners can take to finance a necessary home repair:
1. Assess the extent of the damage
The first thing you can do is determine how much damage has actually been done. A wet spot on your ceiling might seem harmless, but a closer inspection might reveal the problem is bigger and possibly a more expensive repair is needed. Though it may cost some money, hire a professional to come out and give an opinion. Ask them to ballpark how much the repairs will cost so that you've got realistic figures to work with.
2. Determine if an insurance claim is needed
Depending on the root cause of the damage, the repairs may be covered by your homeowner's insurance policy. For example, if a hole in the roof was caused by a falling tree branch during a recent storm, then you may be able to file a claim with many carriers. Take note that the deductibles for storm damage may be quite a bit more than your standard deductible. A good way to know is to read your homeowner's insurance policy and ask questions if you need clarification.
3. Explore your financing options
If your personal savings and emergency fund don't seem as if they'll be enough to cover the repair, here are a few financing options you can try:
- Credit card - You could charge the expense to a credit card while at the same time finding a new one with a zero-percent introductory rate. Transfer the balance to the one with the zero-percent APR so that you'll have adequate time to pay it off without incurring interest.
- HELOC (home equity line of credit) - HELOCs allow you to turn the value of your home into a readily accessible line of credit. Interest rates are typically much cheaper than credit cards, and the terms may also be a little more flexible (such as only having to pay back the interest for the first five to 15 years).
- Personal loan - Personal loans are generally quick and can provide you with thousands of dollars of necessary funding. Be sure to shop around for great interest rates and compare secured and unsecured options.
- Borrow from your 401(k) - If you're contributing to a workplace retirement plan and your employer allows it, then you might have the ability to borrow against your retirement savings. Participants may borrow up to 50 percent of the vested account balance or $50,000 (whichever is less), and they have five years to pay it back. This option is convenient, but it does stunt the growth potential of your nest egg.
4. Choose the right financing option
Depending on how much you need and how quickly you need it, choose the financing option that fits the situation.
5. Make a repayment plan
Making the emergency repair and protecting your home will be your primary goal. But at the same time, it's wise to start planning how you will pay back the money. Take a close look at your budget and look for any expenses that can be reduced or eliminated.
The bottom line
Repairs will inevitably need to be made if you own a home. If an emergency comes up, get the funding you need either from credit or a loan. Don't forget to also check your homeowner's policy to see if your insurance provider may cover it.
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Original Source: How to Pay for an Emergency Home Repair in 5 Steps