What is a Home Repair Loan and How to Finance It?

A home repair loan is an unsecured personal loan that can be made without providing any collateral. Unlike some home-related financing, you won't need to provide your home title, and it won't put your home at risk. It's not a mortgage or a reverse mortgage, and it can be used for any type of home improvement project. Avant offers home improvement loans even to borrowers with less-than-stellar credit, and features an easy application process and fast funding. Our best option for a home improvement loan is SoFi, which offers loans with low rates and high maximum amounts that can cover a wide range of projects.

There are no late fees, prepayment fees, or origination fees. A home repair loan is a general term and can refer to a personal loan used for home repairs or another type of loan, such as a home equity loan. A home equity line of credit (HELOC) is a loan you get using the equity you own in your home. Think of it almost like a credit card, with the set limit you can borrow being the amount of capital you have when you first sign up for HELOC. Most of the time, you will have a 10-year withdrawal period during which you can withdraw money from this fund, followed by a 20-year repayment period. Cash-out refinancing doesn't borrow from your existing mortgage.

Instead, you create a completely new mortgage for your property, complete with your own rates, loan terms and payment schedule. This means that you may be able to get additional benefits from refinancing with cash out if mortgage rates have become more favorable since you first bought your home. An FHA Title 1 loan allows you to borrow money specifically for many types of home repairs and improvements. If you qualify for a low-interest introductory offer on a new credit card and are able to pay for the purchase during the promotional period, it may make financial sense to use it for an emergency home repair. The 1% rule dictates that you must set aside 1% of the purchase price of your home each year for potential repair costs. Using a credit card to finance home repairs can be an easy way to do this, especially if you have a high enough limit on your existing credit card to simply borrow money there. The HOME Investment Partnership Program can help cover repairs for low-income homeowners.

If you don't qualify for this program, you may want to consider applying for a personal loan or even a credit card to finance home repairs. Doing home improvement projects makes it less likely that you will have to pay for costly repairs in the future. When emergency repairs arise unexpectedly and at inopportune times, such as a broken oven in the middle of winter or an extensive roof repair right after returning from vacation, having access to financing options can be invaluable.

Wyatt Warpool
Wyatt Warpool

Passionate zombie nerd. Lifelong music trailblazer. Hipster-friendly zombie ninja. Hardcore tv practitioner. Lifelong music lover. Unapologetic web ninja.

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