What To Do When You Cannot Afford Home Repairs? (10 Options)
Let's face it, our homes are more than just a place to crash.
For many of us, our home is not just a place to sleep and eat – it's our sanctuary, a place to which we can escape the stress of the outside world.
And it's only natural that we want to keep them in tip-top shape.
But sometimes life throws us a curveball, and we find ourselves struggling to afford the repairs our homes desperately need.
It's a tough spot to be in, watching your house slowly fall apart because you can't fix it up.
If you're in this boat, don't panic – you're not alone. There are plenty of people who have gone through or are currently going through something similar.
In this post, I'll give you some tips on what to do when you cannot afford home repairs.
#1 Cash Out Refinance Mortgage
First up, you could try refinancing your mortgage.
Basically, you'd be taking out a new loan with better terms, which could free up some cash for those pesky repairs.
Also Read: What is physical distress in a house?
In a lot of cases, you can borrow up to 90% of what your home is worth. That could be a decent chunk of change to work with. And you can shop around for the best rates and terms before deciding on a particular lender.
But there's the catch – you need to have built up some equity in your home.
Let's help you understand using an example.
Say your home is worth $275,000, and you can refinance up to $247,500. If you still owe $220,000 on your mortgage, you could potentially get up to $27,500 in cash.
Not too shabby for fixing up the house, right?
#2 HELOC
HELOC stands for Home Equity Line of Credit. It's another good option if you've built up some equity in your home.
Basically, you're using your house as collateral to get a line of credit.
The cool thing about a HELOC is that you can draw cash as you need it. It's great if you're not sure exactly how much your repairs will cost.
Usually, you can get a HELOC for up to 90% of your home's value.
One thing to watch out for – the interest rate can change. So your payments might go up if market rates rise.
The good news is, it's usually pretty quick to set up. You'll need to provide some basic info like:
- Your contact details
- Where you've lived and worked
- Bank statements and info about any investments you have
#3 Home Equity Loan
This is similar to a HELOC, but instead of a line of credit, you get a lump sum of cash upfront with a fixed periodic repayment plan.
You can usually borrow up to 80% of your home's value.
If your credit score is 760 or higher, you're in good shape and might be able to get a nice low interest rate. If it's below 620, you might have a harder time getting approved.
Also Read: Mandatory Fixes After a Home Inspection
These loans are usually quicker to get than a cash-out refinance, so they're good if you need to make repairs ASAP.
#4 Personal Home Improvement Loans
If you don't have much equity in your home, a personal home improvement loan might be the way to go. These work like any other personal loan – you'll need a decent credit score to qualify.
Some banks will give these loans to folks with not-so-great credit, but be prepared for higher interest rates.
Also, you usually have to pay these back pretty quickly.
It's not ideal, but it could work if you need to fix your roof, replace your furnace, or sort out your ventilation system.
#5 Home Improvement Store Financing
Here's a little hack to save some cash on your repairs. Big stores like Home Depot or Lowe's often have credit lines or 0% APR offers.
You could spread out the cost of materials over several months without paying interest.
Also Read: Should I Repair And Renovate Distressed Home Before Selling?
Plus, if you spend enough, you might get special discounts on shipping or products.
It's a great way to save on materials, but remember – this won't help with labor costs unless you're planning to do the work yourself.
#6 Create an Emergency Fund
This is more of a long-term solution to avoid future repair headaches.
If you have some money tucked away, you won't have to scramble when something breaks.
Start saving as soon as you can. You could even set up automatic transfers so you don't have to think about it every month.
Pro tips:
- Try to save 1% of your monthly income for home repair emergencies.
- Put that money in a high-yield savings account so it grows over time.
#7 Credit Cards
If you have a good credit score, credit cards can be a quick fix for repair costs.
Just be careful – if the repairs are expensive, you could end up with a massive bill. And credit card interest rates are usually pretty high.
Your best bet is to look for a card with a 0% APR offer.
Call your bank, give them your info, and see what they can do for you.
#8 Start A Side Hustle
If you're living paycheck to paycheck, an unexpected repair bill can be a nightmare.
To avoid this, consider starting a side gig to bring in some extra cash.
Do something you enjoy – maybe blogging, YouTube videos, tutoring, freelancing, or working as a virtual assistant.
Not only will you have some extra money for repairs, but you might even discover a new passion - and maybe it might even turn into a full time job!
#9 Government Financial Assistance Loan Programs
Don't forget about government help!
There are several programs out there that can help with home repairs.
Check out options like the FHA 203 (k), Title I Property Improvement loan, and the Section 504 Home repair program.
Section 504 Home Repair Program
This program offers loans and grants to older or low-income homeowners.
To qualify, you need to:
- Own your home
- Make less than 50% of the average income in your area
- Live in a rural area
For grants, you need to be over 62 and use the money to fix safety or health issues. You might have to pay it back if you sell the house within three years.
You can borrow up to $20,000 in loans or get up to $7,500 in grants.
Some people might even qualify for a mix of both.
Title 1 Property Improvement Loan Program
You can borrow up to $7,500 unsecured or $25,000 secured for up to 20 years.
This is great if you don't have much equity but need cash for urgent repairs.
Insurance Claim
If your home was damaged by a natural disaster like a storm or flood, check your insurance policy. You might be able to file a claim.
If that doesn't cover everything, look into FEMA grants for additional help.
#10 Sell the House As Is
If the repairs are just too much to handle, you might want to consider selling your house as is. Real estate investors and listing agnets, like Sell Your Property Fast, are always looking for fixer-uppers and can often make quick cash offers.
You might get an offer within a day and close the deal in as little as a week. The offer might be lower than you'd like, but it could be worth it for the convenience.
Plus, you'll save on things like commission, closing costs, and staging.
To get a better offer:
- Tidy up your yard
- Declutter and clean inside
- Give your front door a fresh coat of paint
- Wash the windows
- Do any easy DIY touch-ups
These little things can make your house more appealing to investors and might help you get a better price.
Also Read: When Should You Accept the First House Offer?
Parting Thoughts
The cost of home repairs can get out of hand and may even become unaffordable at any time. But don't worry - if you've built up some equity in your home, borrowing against it can be a good way to fund repairs.
But the best thing you can do is start an emergency fund now, before you need it.
That way, when something goes wrong, you're ready to tackle it.
But if none of the loans, grants, or insurance options work for you, selling your house as is might be your best bet.
And remember, it's always a good idea to talk to a professional before making any big decisions about your home or finances.
FAQs
What happens when a house is vacant?
When a house sits empty for a long time, things start to fall apart.
The electrical and plumbing systems can deteriorate, the air gets stale and humid, and it becomes a paradise for dust, mold, and critters. Empty houses can also attract vandals or squatters.
All of this adds up to more repair costs down the line.
How long can a home be unoccupied?
It depends on where the house is and what it's like inside.
Usually, after about a year, you'll start to notice a musty smell and lots of dust. The house might become a home for insects and small animals.
Older houses with outdated systems might start having problems sooner. Newer, well-built homes might be okay for a few years.
Home equity finance or HELOC: Which is better?
Both are good options, but they work best in different situations.
A HELOC is great if you're not sure exactly how much money you'll need. You can take out cash as you need it.
A home equity loan is better if you know exactly how much your repairs will cost. You get all the money upfront, usually at a fixed interest rate.