Being a Champaign County homeowner means dealing with the unexpected. If you own a home, you’re responsible for dealing with emergencies and repairs. Repairs are often costly, time-consuming, and stressful.
A new home may have a lower risk of requiring emergency repairs. Older homes, however, can require quite a bit of maintenance.
It always seems as if emergency home repairs come at the most inconvenient times.
For example, until you have a problem with your roof, you might not give it much thought. Your furnace and air conditioner are major systems that you don’t usually think too much about until it breaks down.
Nerdwallet reports that 65% of American homeowners say their house needs to be fixed to make it safe and free of damage. The primary barrier is cost.
Including both repairs and routine maintenance, a study from Porch found that a home’s maintenance costs average about $16,000. Every year, Discover recommends budgeting 1% of the value of your home for maintenance. You should theoretically expect to spend $3,000 each year on home maintenance if your home is worth $300,000.
In the event of an emergency, you may be scrambling to figure out how to pay for repairs if you lack an emergency fund. But there are options if you cannot afford an urgent expense that you have to deal with right away.
Can You Make a Homeowners Insurance Claim?
In the event of an emergency, you might not have time to wait for the homeowners insurance claim to be processed and paid. However, you can still get coverage through your policy.
The problem here is that your insurance may not cover the repairs you need. Keeping the deductible in mind is also important.
Disaster Relief
If you have a repair resulting from a disaster, an organization like FEMA or the Red Cross may have options. FEMA often offers funds to homeowners for damage and emergency disaster repairs not covered by their insurance.
Disaster relief is only for repairs related to sanitary living conditions or safety.
Government Assistance
The FHA 203(k) and Limited 203(k) are loan programs so that borrowers can buy or refinance a property, and then there’s additional money added to the total loan amount for the cost of upgrades or repairs.
These loans are available through the Title I Property Improvement Loan Program, issued by the Housing and Urban Development Department. Title I loans are insured by the FHA and issued by lenders, specifically geared toward owners with little equity in their homes.
Home Equity Line of Credit
With a home equity line of credit (HELOC), you can use the value you have in your home. If you have an unexpected major expense, this can be a good way to take advantage of your home’s equity. You are borrowing against your home, though, so make sure you use the money wisely and pay it back.
Similarly, a home equity loan is secured against the equity in your house. This loan is different from a HELOC because it’s issued as a lump sum rather than a line of credit. You get a fixed interest rate with a home equity loan since it’s secured. Secured means your home is the collateral.
To get a home equity loan, you usually have at least 15-20% equity.
Personal Loans
A personal loan isn’t the best way to cover an emergency expense if you can avoid it, but it may be your only option. The good things about personal loans are that you can qualify and get funding quickly. Once you’re approved, an online personal loan may show up in your account the next day.
The application process is fairly simple too.
Credit Card
Finally, if you have to use a credit card, try to find an option to apply for that has a 0% APR introductory period. The longer this period, the better if you can qualify. Then, you can pay back the cost of the emergency expense over time without high interest rates.
Dealing with emergency repairs is never fun, but with these tips you can help make the process go more smoothly.
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