Getting the Job Done

Financing Options

Not everyone can afford paying cash on hand for a major roofing project. Some contractors offer their own financing options, but you should compare their lending rates against those of a bank or other financial institution.

Whatever method of payment you choose, following these tips will help you avoid problems:

•  Get a written estimate or bid (three estimates by different contractors is ideal)
•  Read and understand the contract fully before signing it
•  Never pay the full amount before a job is completed, and you are satisfied
•  Do not pay more than 10 percent or $1,000, whichever is less, as a down payment
•  Always get a signed receipt as proof of payment

Choosing a loan type ultimately depends on your available credit, debt, present income, as well as current lending rates. Below are the most common options for borrowing money.

Unsecured Loans

Unsecured loans are types of loans that are not backed by collateral. A credit card is a quick and easy way to finance your roofing project, but carries a higher interest rate than other lending options. Paying back the amount you used to finance your new roof will take a number of months or years, increasing the total amount paid.

Obtaining a loan at a lower interest rate, such as a line of credit, is a superior option. A line of credit is an agreement arranged with your bank or other financial institution that gives you a specified amount of credit for a specified period of time and is similar to a cash loan.

A third option, a personal loan, carries an interest rate lower than that charged on a credit card, but higher than that associated with a line of credit. You must pay interest from the day the loan is deposited into your account, regardless if you use it immediately.

Loan comparison calculator

Home Equity and Home Improvement Loans

These loan types are secured, meaning your home is used for collateral. Your home's equity is the difference between what you owe on the house and its current market value. The most common home equity loan is a second mortgage, which generally carries a higher interest rate and a shorter term than your first mortgage.

Similar to a second mortgage, a home equity line of credit is secured by your home's equity. Like a regular line of credit, the credit amount is issued to you for a specified period of time, and withdrawals can be made at any time.

A home improvement loan is extended for the purpose of making permanent improvements to a home. This loan is usually financed through a government agency rather than a financial institution.

Mortgage term comparison calculator