A Simple Guide to Funding Some Major Home Repairs

If you own your own home, chances are you’re going to find yourself needing to repair everything from electrical outlets to replacing the HVAC or boiler systems. A few of these projects can be accomplished on the cheap, but many will cost hundreds or even thousands of dollars.

One way to make sure you never have to pay out of pocket for a home repair, is not to rely on your home insurance policy but instead, invest in a home warranty. For just a few bucks per month you can repair or replace minor and major appliances and systems for no out-of-pocket costs. If you’re looking for a reputable home warranty company, simply do a Google search.

But what are some other ways you can tackle paying for annoying home repairs? According to a new report by The Star Democrat, making necessary repairs to your home is one of the smartest moves you can make. There also happen to be a variety of ways to pay for your repairs, upgrades, and improvements.

That said, here’s a simple guide to funding some minor or even major home repair projects.

Use Cash

Cash is freedom. If you have enough lying around, you can save quite a bit on interest fees while also getting discounts from contractors who prefer the “pretty green” to a credit card for the work that needs to be accomplished.

You don’t need to be shy about asking for a discount if you plan on pre-paying in cash. Most contractors will jump at the chance to perform work “under the table,” so to speak. Plus, if you happen to be a military veteran, a first responder, or active duty military individual, lots of contractors are happy to offer a military/first responder discount. In fact, a lot of companies offer this discount so all you need to do is ask.  

Sell Your Adult Toys

Says the Star Democrat, if you are the type of man or woman who loves adult toys like motorcycles, boats, snow mobiles, a Jeep Wrangler rock climber, and more, you might want to consider selling one or all of them to work up the cash you need to finance your home repairs. It might seem painful at first by getting rid of your fishing boat, but fixing your home is more important. Down the road, after the repairs are completed, you can purchase a new boat. 

Sell Your Extra Land

If you own considerable property that’s presently undeveloped you might consider subdividing it. If that’s the case, now would be the ideal time to look into how to go about legally subdividing so you can utilize some of the profits not only for your home repairs, but also for investment opportunities.  

Don’t be Afraid to Ask Friends and Family

If your credit isn’t all that good, or if you just don’t feel like paying today’s high interest rates, don’t be afraid or embarrassed to approach your family and friends for a short-term loan to finance your minor or major home repairs. Be professional about it. This means drawing up a legal agreement that all parties will be happy to sign. This will help put everyone at ease.  

You can entice your family and friends for a loan if you’re willing to help them by agreeing to pay an interest rate that’s more than the paltry rates typically being offered by the commercial banks in 2023. It’s quite possible you can even have your family/friends loan recorded in the county land records as a lien against your home, that is, until it is paid back in full. This will create trust between you and the people who are assisting you financially.

Liquidate Stocks and Crypto Holdings

One sure-fire way to come up with the cash you need to pay for major home repairs is to liquidate some stocks or even crypto holdings. But before you do this, you need to speak with your financial advisor or accountant first to get a clear understanding of the tax implications. For instance, if you sell a crypto like Bitcoin, this will be considered a taxable event. The same can be said for selling stocks and bonds.

If you hold certificates of deposit, cashing them out prior to their maturation date can usually result in a penalty of up to 20 percent. Do your research first before making this financial move.

Get an Advance from a Real Estate Broker

If you plan on listing your home after your necessary home repairs or renovations are completed, you can speak to your real estate broker about getting an advance toward the funds that will be paid out to you upon your closing. For instance, Coldwell Banker is said to offer a financial advance program that’s called RealVitalize. It’s engineered for home sellers where the seller will apply for an advance of cash up to and including the listing commission.  

One of the best parts about this program is that there are no markups, no payments, and no interest fees applied to the advance. You can also use the funds for home inspection items that need to be repaired or replaced, such a roof or HVAC system.

Seek Out Cash-Out Refinancing

Home prices have doubled over the last year along. With this steep rise in property values, it’s possible you can refinance your existing mortgage and use that cash to pay for your home repairs and improvements. Why not put all that equity you’ve been building up for years to good use? Which leads us to…

Apply for a Home Equity Loan

The Star Democrat states that if you are searching for cash to prepare your home for a possible sale, applying for a home equity loan might be the perfect short-term solution to your financing problem. Accessing some of the equity you’ve put into your home can dress it up for a successful sale.

If you happen to be 62 years of age or older, you can even apply for a reverse home mortgage that can help pay for necessary repairs and renovations. If approved you can receive potentially hundreds of thousands of dollars. You can take your proceeds in one lump sum payment or equal monthly distributions.

What’s nice about a reverse mortgage is you need never pay it back until you leave or sell you home, or until you die. Again, it’s a simple matter of putting all that equity you’ve built up in your home to work.

Utilize a Credit Card

While this isn’t the preferred choice for paying for major home repairs due to high interest rates, it is possible to use a credit card effectively in the short-term so long as you pay off the cost of the home improvement as fast as possible. Or if you’re selling your home, you need to pay off the credit card on the day of your closing. That is, as soon as you cash your check. This will keep interest rate costs to a minimum.

There’s no doubt that a credit card is a source for quick funds. Also, some credit cards offer bonuses like travel and airline points which can be a real plus for those who love to be on the go.

Government Loans and Grants

Depending on where your property is located, it’s possible you can qualify for a government sponsored FHA203K home improvement loan. There are said to be similar loans also available to homeowners badly in need of repairs.

Or you can choose to look into nonprofits and local government agencies that offer low-cost loans or even grants for home repairs, rehabilitation projects, and energy saving upgrades.