Do you need a new roof? Are you trying to figure out the best way to pay for your roof replacement?
After learning you need a new roof, there’s a lot to learn, like what needs to be replaced or finding a great roofing contractor. However, there’s one thing that a lot of homeowners don’t think about until it’s time to close out.
The methods to actually pay for your new roof. Can you pay in cash? By check? Is it possible to finance?
The truth is, there are multiple ways to pay for a roof replacement.
For over 35 years, Bill Ragan Roofing’s main goal is to educate every homeowner on all the aspects of your upcoming roof investment. So, let’s look at all the ways to pay for your new roof to determine which one is right for you.
By the end of this article, you’ll learn more about the following ways to pay for a new roof:
- Paying out of pocket
- Financing your new roof
- Getting a Home Equity Line of Credit (HELOC)
- Applying for a personal loan
- Can you get insurance to pay for a new roof?
Paying out of pocket
Paying out of pocket is the simplest and best way to pay for a new roof. However, there are advantages and disadvantages of paying directly from your own bank account.
Pros of paying out pocket:
- No interest or monthly payments
- Full control over the payment method
- No waiting on loan approvals
Cons of paying out pocket:
- Huge upfront expense
- Can drain savings
While some roofers accept cash, the two most popular types of out of pocket payments are with a card (credit/debit) or a check. If you pay with a credit card, there will be a transaction fee and you’ll incur high monthly payments.
Just know that some companies may not accept certain credit cards, so using a check is the best way to avoid any confusion or hidden fees.
Financing your new roof
No matter the financial situation, financing a roof replacement is a great and common option. The great thing is that most roofing companies offer financing options, either in-house or through a third-party lender.
Benefits of financing your new roof include:
- 0% interest for a certain time
- Monthly payments over a fixed term
- Some plans offer promotional periods
Just know that approval and interest rates vary based on credit, and plus the roofing contractor has no power over approval.
Getting a Home Equity Line of Credit (HELOC)
A home equity loan or HELOC (Home Equity Line of Credit) allows you to borrow against the value of your home. A HELOC is tied to a second mortgage on your home, and the interest rates are usually better than regular financing.
However, it also usually takes a little bit longer to get approved compared to other loans or financing.
Pros of HELOCs:
- Lower interest rates
- Longer repayment terms
- Interest may be tax-deductible (under certain conditions)
Cons of HELOCs
- Your home is collateral
- Requires very good credit and equity
- Longer approval process
A HELOC is a great way to pay for a new roof if you have a lot of equity in your home and plan on living there for the foreseeable future.
Applying for a personal loan
Personal loans can be used for roof replacements, especially when other options aren’t available or you weren’t approved. However, this is completely up to you to find and shop around for.
Getting a new roof through a personal loan usually has:
- Fixed monthly payments
- Higher interest rates
- No collateral required
- A heavy impact on credit score
This is probably the least common option, especially with roofing companies offering financing. However, it’s also the one that may be a necessity depending on how bad the roof is.
Can you get insurance to pay for a new roof?
If your roof is covered by an RCV policy through your homeowners insurance, filing an insurance claim can be a way to pay for a new roof. However, your roof must have clear signs of roof damage caused by a covered peril.
Insurance policies cover roof damage caused by:
- Straight line winds
- Hail
- Fallen trees or limbs
Now, keep in mind that the insurance company and their adjuster have all the power in the approval process. So, there are certain things they’ll look for that aren’t covered.
Insurance generally does not cover roof damage caused by:
- Old age
- Normal wear and tear
- Improper installation
- Inadequate attic ventilation
- Product defects
- Lack of maintenance
If your roof is simply worn out, been neglected, or reached the end of its lifespan, insurance will not pay for the replacement. But if you and your roofer are adamant that the roof needs to be replaced due to storm damage, there are options if your claim gets denied.
How much will your new roof actually cost?
Now you know the different ways to pay for your new roof. Most homeowners pay out of pocket, but it’s not an option for everyone.
If you’re worried about paying for your new roof, talk to your roofing contractor about financing options. And if you’ve had a damaging storm, it’s a good idea to look into getting a new roof through insurance.
However, you won’t know the best payment option for you without actually understanding the budget needed for a roof replacement. Unfortunately, the roofing industry doesn’t like to talk about pricing.
Well, I believe in doing things differently at Bill Ragan Roofing.
Check out How Much Does a New Roof Cost to learn how much a roof replacement costs right now on average, based on roofing material, and what affects pricing.
