8 Ways to Pay for Emergency Home Repairs When You’re Strapped for Cash

Here’s how to get money quickly if you’re faced with an emergency home repair.
10/3/19 | By Miranda Marquit
Man repairing roof

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If you own a home, chances are you’re going to have to handle an emergency home repair at some point. Depending on the situation and the severity of the emergency, the cost of the repair can set you back.

In fact, the Federal Reserve reports that about four in 10 Americans couldn’t handle an emergency cost of $400. There’s a good chance that your home repairs could go beyond that threshold. Here’s what you need to know when it comes to covering the cost of an emergency home repair.

What do emergency home repairs cost?

You might be surprised at the cost of an emergency home repair. Some basic items can be costly, and your homeowners' insurance will likely only cover the costs of repair due to a natural disaster, accident, or theft. But it’s important to note that not all natural disasters are covered by a standard policy. Reviewing your policy can help you determine exactly what’s covered by insurance and what isn’t.

According to HomeAdvisor’s True Cost Guide, here’s what you can expect to pay for common emergency home repairs:

Common emergency repair Potential cost
New gas furnace (plus installation) $3,585
Burst pipes (water damage and repair) $1,000 to $4,000
Roof repair $834
Replace hot water heater (plus installation) $767 to $1,445
Replace window pane glass $269

As you compare costs on emergency home repairs, it’s important to note that your final cost depends on factors including the type of repair, whether you pay someone else to do the work, and the materials used.

For example, if you need to replace your hot water heater, you’ll pay more for a tankless water heater than a standard one. You might pay between $700 and $2,000 for a standard hot water heater, but a tankless heater could cost between $1,000 and $3,000. When repairing leaking or burst pipes, you’ll have to factor in the cost to repair the water damage as well as the cost to repair the actual pipes.

No matter the repair, though, there’s a good chance that you’ll have to pay hundreds of dollars to cover it — and you’ll need a way to come up with the money.

How can you finance home repairs?

Paying for home repairs is part of the cost of homeownership. However, there are various ways to cover these costs when they arise. Tackling home repairs as quickly as possible is important because the longer a problem remains, the more expensive it can get.

Here are some good options to pay for emergency home repairs.

1. HELOC

A home equity line of credit (HELOC) is a revolving credit line based on the equity you’ve built in your home. You’re granted a line of credit from the lender based on the value of your home, and you can access the money as needed. You pay down a HELOC much as you would with a credit card. As long as you make payments, you can keep freeing up credit to use for emergency home repairs.

How to apply for a HELOC

Contact a lender to find out how much you can borrow. Your lender will look at how much you still owe on your home, as well as your home’s market value. Many lenders will lend you up to 90% of your home’s equity.

Let’s say your home is worth $275,000, and you owe $225,000 on your mortgage. Your lender won’t want the total of your two loans (original loan plus the HELOC) to exceed $247,500. Your HELOC would likely be no more than $22,500.

When you apply for a HELOC, you’ll go through a credit check, and you’ll have to provide the following:

  • Contact information and identifying information (including Social Security number)
  • Information about people living in the home
  • Residence history of at least two years
  • Employment history
  • Bank and investment account statements
  • Information on other properties you own
  • Other documentation for life events (divorce, marriage, etc.)

What to expect

With a HELOC, you can draw on the line of credit as needed for repairs. You can also pay down the HELOC over time and free up more funds for use later. Find out from your lender what to expect in terms of repayment timeline and how long you can keep the HELOC open.

2. Home equity loan

Like a HELOC, a home equity loan is based on the value of your home. However, rather than being an open-ended line of credit, you receive a lump sum and a regular repayment schedule.

How to apply for a home equity loan

A HELOC is actually a type of home equity loan, so when you apply for a “regular” home equity loan, you’ll need much of the same information. Some lenders might restrict your total debt to 80% of your equity, so it’s important to know the requirements of individual lenders as you compare options.

Also, be aware of your credit situation. As long as you have a credit score of at least 760, you should be able to get access to the best interest rates on your home equity loan. If your score is below 620, you might not be able to get a home equity loan — no matter how much value you’ve built up in your home.

What to expect

You’ll be given a payment schedule, along with a typically fixed interest rate as you repay your home equity loan. However, if you need more money for a different repair or if some other emergency comes up, you’ll have to apply for a new home equity loan.

3. Personal loan

If you don’t want to secure your loan with your home, an unsecured personal loan might be a better choice. With a home equity loan or HELOC, if you miss payments, you could lose your house.

However, with an unsecured personal loan, you don’t have to worry about collateral. Even so, you do need to be careful. With a personal loan, your creditor could sue you for the amount that you owe and bring you to court. If a judgment is made against you, your wages could be garnished.

How to apply for a personal loan

There are a number of lenders, from your own bank to online resources, that offer unsecured personal loans. Lenders will ask for identifying information, such as your Social Security number, and check your credit. They’ll also ask for information about your income and other debt you owe. Your interest rate will be based on how much you borrow, the length of time you’ll have the loan, and other factors.

What to expect

Many personal loans come with fixed interest rates, and you’ll have a fixed term. Depending on the lender, you might be able to borrow as little as $1,000 or even as much as $100,000.

Because a personal loan offers a lump sum and fixed payment schedule, if you need more money for a different repair, you’ll have to apply for a new loan.

4. Credit cards with 0% APR

If you hope to get an unsecured loan and want the benefits of a revolving line of credit, consider a credit card. With the right no-annual-fee credit card, you might even be able to get a 0% APR (annual percentage rate) on purchases during a set period. This way, you can cover the cost of your emergency home repair without paying interest.

How to apply for a credit card

Most credit card applications are fairly simple. Provide your name, address, phone number, Social Security number, annual income, and housing costs in a form. You usually receive an answer in a matter of seconds.

You’re more likely to qualify for a better introductory rate if you have a higher credit score.

What to expect

There are several credit cards that offer no interest for a set period if you qualify, including:

Card name Introductory purchase APR Introductory purchase period
American Express Blue Cash Everyday 0% 15 months
Chase Freedom Unlimited 0% 15 months
Capital One® Quicksilver® Cash Rewards 0% 15 months

If you get a 0% APR credit card, create a plan to pay off the balance before the end of the introductory period. Otherwise, you’ll have to pay interest.

5. Refinance your home

If you don’t want to put a second lien on your home with a HELOC or home equity loan, you could refinance your home for more than you owe and take the difference. This is often referred to as a cash-out refinance. It’s common for some lenders to refinance up to 85% of your home’s value. When a lender refinances your home, your old mortgage is paid off, and you have a new mortgage.

So, if your home is worth $275,000, you might be able to refinance $233,750. If you owe $225,000, you’d get $8,750 in cash that you could use toward an emergency home repair.

How to apply for home refinancing

Because a refinance is a home loan, you can expect to provide all of the information that you’d need to get a home mortgage. Your home might need to be appraised, and you’ll have to provide documentation about your income, identity, homeownership, assets, and other debt. You can apply to refinance your home at a bank or look online for lenders that offer refinancing options.

What to expect

It can take weeks to complete a home refinance. For example, when I refinanced my home, it took about four weeks to complete the process. If you need money immediately for an emergency home repair, a cash-out refinance might not be your best option.

6. Government assistance

Depending on the situation, you might be able to get help from the government to make emergency home repairs. There are a couple of options that can provide you with the funds you need.

Title I Property Improvement Loan Program

If you don’t have a lot of equity in your home, you might be able to get a loan of up to $7,500 to make repairs without the need for collateral. With collateral, you can get a loan of up to $25,000 and a term of up to 20 years. Apply by going through a Title I lender in your area. Call 800-767-7468 to get a list of approved lenders near you.

FEMA

You can get help from the Federal Emergency Management Administration if your home has been damaged or destroyed and is located in an area that has been declared a disaster area by the president. You must apply for a grant to cover costs that aren’t covered by your insurance. To see if you qualify, fill out an application online.

7. Financial assistance from family

Your family might be in a position to help with emergency home repairs. If family members are willing, consider asking them for financial assistance. You may receive the money as a gift, or they might be willing to provide you with a low- or no-interest loan. If you decide to accept help from family (or friends), make sure you’re clear on expectations. Develop a clear repayment plan upfront to avoid damaging your personal relationship.

8. Use your emergency fund

One of the best things you can do is build an emergency fund so you have cash readily available in case of an emergency home repair. Dipping into your emergency fund can prevent you from going into debt for home repairs and other costs. It’s a good idea to have a plan to “pay yourself back” by adding more money into the emergency fund once your immediate need is addressed.

You can also start a home repair emergency fund designated specifically for home maintenance. Set aside a certain amount each month in a high-yield savings account and earmark it specifically for repairs. Later, when the inevitable emergency home repair comes up, you can cover the cost with money saved for that purpose.

Home repairs don’t have to be a financial emergency

An emergency home repair can catch you off guard, but if you prepare ahead of time, you’re likely to be able to meet your needs. Your best option is to have the money on hand in an emergency fund or some other account. However, if that isn’t a reality, you might benefit from some of the other options.

If you’re looking for money quickly, though, a personal loan might be your best bet. You can usually get approved quickly, allowing you to address the problem fast. Carefully consider all your options, and choose one that works for your situation and budget.

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