How to Pay for Emergency Home Repairs When You Don’t Have Cash

November 2, 2021

If you have found yourself in a sticky situation needing to make emergency repairs, you may be strapped for cash. Emergency repairs never seem to come at a good time, so it’s no doubt that you might be looking for some creative solutions to foot the bill. Here are a few ways you can get the funds you need to cover emergency home repairs.

1. Personal Loan

Depending on the severity of the repair, and the price tag that comes along with it, a personal loan could make sense. These are not mortgages, but you will still need to ensure your credit and finances are in relatively good shape to avoid higher interest rates.

Pros: Available in many places (banks, credit unions, online lenders), typically quick to secure, not another mortgage, good for bigger repairs.

Cons: Need to have good credit, if you are not disciplined it could be hard to pay back.

2. Homeowners Insurance Claim

What’s the point of paying homeowners insurance if I can’t use it for home repairs? Well, if the repair is truly an emergency, you may not have time to go through the process of filing a claim and waiting for the payout. If you have the time, this could be a great option – assuming the repair is covered by your insurance.

Pros: You are already paying on your insurance – why not take advantage of it, no loan to pay back.

Cons: Could take a while to process, high deductible, the repair may be less than your deductible, the repair may not be covered.

3. HELOCs

Home equity lines of credit (HELOC) are similar to mortgages because the home is used as collateral for the loan, unlike personal loans. It is a line of credit from which you can borrow multiple times. With HELOCs, you have a bit more flexibility than you would with a personal loan, which could come in handy if you aren’t sure how much a project will amount to.

Pros: You can borrow multiple times, more flexibility, not one fixed amount.

Cons: Need 15-20% of equity already on the home, it could take a while to process.

4. Home Refinancing Options

You may want to take advantage of current loan interest rates. By refinancing your home, you can secure a HELOC or access the equity you already own on the property through a cash-out refinance.

Cash-out refinances: With this type of refinancing, you take out a loan for more than you owe on the property. The difference goes to you in cash and can be used for repairs or home improvements.

Pros: You are accessing the equity you already own, the repairs or improvements you make could increase the value of your home, you could lower your interest rate or monthly payment.

Cons: You have a bigger mortgage to pay off, not great for immediate emergencies – the process could take a while.

5. Government Loan or Assistance

If you qualify, there are several government grants and government backed loans that typically have low interest rates and are meant to assist borrowers with home repairs. Here are a few examples:

FHA 203 (k) or Limited 203(k) Loans: Provide borrowers with additional funds on a purchase or refinance to pay for repairs.
Title I Loans: The department of HUD offers FHA-insured loans to borrowers, particularly those with little equity. These funds can be used for major home repairs and essential appliances.
USDA Section 504 Home Repair Program: For borrowers in low-income rural areas, these loans provide funds for repairs and renovations.
FEMA: The Federal Emergency Management Administration provides assistance grants to homeowners whose properties have been damaged or destroyed in an area declared a disaster area by the president.

Pros: Take advantage of grants or low-interest loans backed by the government, typically lower interest rates.

Cons: You may not qualify for these programs, your repairs may not be covered, not great for immediate emergencies – may take a while to process.

6. Credit card

If the repair is an emergency that cannot wait, you always have a credit card to fall back on. This makes the most sense for minor emergencies but should be used sparingly, as the interest rates will be high.

Pros: Fast, good for minor emergency emergencies.

Cons: High-interest rates, could result in even more debt if you don’t pay the balance quickly, not great for significant emergency repairs.

7. Sell to a Reputable Cash Home Buyer

If the repairs are too much or too much of a headache to deal with, you could consider selling to a professional home buyer. These companies specialize in buying a wide variety of homes, including fixer-uppers in need of repairs or even gutting. They are experienced in purchasing directly from homeowners, so you can bypass the complications and extra fees associated with selling on the traditional market with a realtor. An added bonus: they often buy in cash!

Pros: They pay in cash, fast closing time, no inspection, as-is, you don’t have to worry about fixing repairs, or pay any Realtor fees.

Cons: The offer will likely be under retail since the investor needs to have room to make a profit for a fix & flip investment and cover any repairs to bring the property value up to maximize resale value.

Skip the Repairs & Sell Your House “As-is” for Cash

At Pavel Buys Houses, we are a team of professional Massachusetts cash home buyers dedicated to providing top-notch service to the homeowners we work with. As a local, family-run business, we understand the complications of homes in need of repairs. That is why we make the process as quick and painless as possible so you can wash your hands of a needy home.

Our CASH home offers are always fair and based on a market analysis of similar homes in the area. We want to empower you to make the best decision for your family, so there are no obligations. With us, there are no realtor fees, no cleanouts, and no repairs. We buy your home “as-is.”

We would love to speak with you. Contact us today, and we can discuss getting your house for cash fast.