How To Pay For Emergency Home Repairs

Industry Observer with ValuePenguin

For many people across the country, owning a home is part of the American dream. But homeownership is also a major responsibility—including cleaning, maintenance and the financial wherewithal to handle an emergency home repair when the need suddenly springs up.


In 2015, a survey found that 25% of homeowners had no money set aside for emergency home repairs—and of those who did, the majority only had $1,000 or less available. When the sudden need for home repairs—such as fixing a leaky roof before it causes further damage—means that you have no choice but to act, it can be difficult to find the necessary funds. Here are a few options that homeowners may want to consider for emergency home repairs.


Is it Time to Tap Into the Emergency Fund?


If you thought the statistics above didn’t bode well for most homeowners’ ability to fund their emergency repairs, consider this: According to a 2017 survey, more than half of adults had less than $1,000 in total savings, although others—some 27% of respondents—had $10,000 or more saved.


The concept of an “emergency fund” is popular among personal finance gurus, because having an emergency fund in place means that homeowners can pay for something like emergency home repairs without financing via debt. This helps avoid interest-bearing payments, which in turn can compound the cost of these home repairs.


How can a homeowner know when it’s time to tap into the emergency fund? Generally, any pressing issue with the following categories will qualify:


  •       Car repairs—especially for cars needed to get to work
  •       Home repairs
  •       Medical expenses


Reach Out to Your Home Insurance Company


Before a homeowner taps into an emergency fund, however, it’s worth exploring the other options on the table. The most obvious: home insurance. Keep a copy of your home insurance policy in your secure files for occasions like this. Give it a quick scan if home repairs are needed to see if the costs are covered. If you’re not sure, call your insurance company and ask them outright.


Those who don’t need emergency home repairs but are considering how to handle them should the need arise, should also use this time to figure out whether their current insurance plan is worth the expense.


Tips for Handling Emergency Home Repairs without Extra Funds


For those without an emergency fund in place or home insurance that will cover the short-term expense of repairs, it’s easy to feel stuck. But there are options. Here are a few potential tips for covering home repairs without doing major damage to your finances:


  •       Utilizing a credit card with 0% introductory APR. What is APR? APR refers to annual percentage rate, or the interest you’ll pay if you maintain a credit card balance. Utilizing a 0% introductory purchase APR gives you the ability to make a lump sum payment with a credit card while postponing the interest on that debt, which gives you some chronological wiggle-room. As long as you can pay the debt before the interest kicks in (read the fine print to know for sure), this can be an effective way to manage debt with a credit card. 


If you've already made a large purchase on a credit card with a high interest rate for an emergency repair and are fretting the high cost of interest, one of the options you have is to apply for a balance transfer credit card. Balance transfer credit cards also typically come equipped with a 0% introductory APR period, but for balance transfers rather than purchases, as the name suggests.


  •      Check out HELOC options. A home equity line of credit, or HELOC, is a financial tool that allows you to borrow against the equity of your home. If you already have a mortgage, this debt can be an added burden, so make sure that you go about this process responsibly: You want to make sure not only that you can pay off the HELOC in due time, but that you can comfortably move forward with both a HELOC and a mortgage payment in your budget.


  •       Reach out to HUD. Depending on your income status, there may be a possibility that you would qualify for a home repair loan with the Department of Housing and Urban Development—but make sure you check on the requirements of these loans before counting on the funds.


  •       Reduce costs. If you’ve run the numbers and haven’t yet figured out how to make any of the options work, try some legal and easy ways to reduce costs. Ask for multiple free quotes on the repairs—as well as the advice of family and friends who have dealt with similar problems in the past.


Sudden damage to your home can be a traumatic experience—especially for homeowners that don’t know how they’re going to pay for it. But if you fully explore these tips, you may find that you have more access to empowering options than you might have imagined.


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Joe Resendiz

Jr. Research Analyst
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