Know Your Financing Options

Government Home Improvement Loan

USDA Rural Development Home Repair Program Grants & Loans: If you are over 62 you may qualify for a grant up to $7,500.  Loans are at 1% up to 20,000 for a combined total of $27,500.  Click Here for More Information or Click Here for the Application.

Rebuilding Together Austin: This is a free option to qualifying homeowners in the City of Austin.  Click Here for More Information or Click Here for the Application

City of Austin Home Rehabilitation Loan Program: To help homeowners finance needed home repairs.  Loans are 0% for $15,000 - $75,000.  If the home needs to be demolished and rebuilt the loan can go up to $130,000.  Click Here to Learn More or Click Here for the Application.

City of Austin GO REPAIR GRANTS!: This is a grant up to $15,000 to help low income households make needed home repairs.  Click Here to Learn More or Click Here for the Application.

City of Austin Minor Home Repair Grants: This is a grant to help low income households to make minor home repairs up to $5,000.  Click Here to Learn More or Click Here for Application.

2 Options from FHA:  FHA 203(k) standard loan, which requires you to refinance your property and roll the amount of the loan (minimum of $5,000) into the total amount owed. The second is an FHA Title I loan, which is similar to a personal loan, except amounts over $7,500 are secured by your property and funds must be used for home improvements.

Personal Loan

Personal loans can often get you the best financing deal for a new roof, especially if you have excellent credit. This is because you can choose your lender and your interest rate (depending on your credit score). These unsecured loans can give you the best financing deal because you don't have to have any collateral, you can typically get funded right away (within 24 hours in many cases), and the rates are lower than most credit cards.
 
With a personal loan, you can easily apply over the Internet, and if you're approved, you can get your roof replaced right away. Interest rates on personal loans vary from about 4.49% to 25%, but some lenders can go as high as 36%. So, if you have excellent credit, a personal loan would be a smart move. However, if your credit is poor, you could pay a hefty interest rate that may not be the best deal you can get.
 
 

Home Equity Loan

Home equity loans can be one of the best ways to pay for a new roof for a number of reasons. First, this type of loan often has a significantly lower interest rate than other loans, including personal loans. In 2020, the average interest rate for a home equity loan is 5.82%. A home equity loan is essentially a second mortgage that you take out on your property against the equity you've built up in your property
 
Equity is the difference between the current value of your home and how much you owe on it. This type of loan can take longer to get because you'll have to get your property appraised before knowing how much you can borrow. However, you are essentially paying yourself back (minus the interest rate) for money taken out against the value of your property. You can usually get a 15- or 20-year term on a home equity loan.
 
 

Home Equity Line of Credit

This type of financing is similar to a home equity loan except that the credit you are extended is made available on a revolving basis, much like a credit card, but at significantly lower interest rates. A major difference between the two types of loans is that a home equity line of credit or HELOC will usually have an adjustable interest rate that could increase or decrease in the future. Currently, the average interest rate on a HELOC is 5.61%.
 
If you already have a HELOC and you haven't used it all, this may be the way to get the best roofing financing deal. You won't have to wait for your property to be appraised and you'll already know how much money you have available. However, if you do not have a HELOC yet, you will have to wait for a lender to determine how much credit they're going to extend to you. Terms can be between five and 20 years for HELOCs.
 

Roofing Company Financing

A great way to get your roof financed is through the company that's going to install your new roof. You can usually get friendly terms of 10-to-15 years and an interest rate that's better than almost every credit card out there. In many cases, you'll discover an interest rate under 11%. Even if you don't have the best credit, you're still likely to find that the rates at your roofing company are better than those on a personal loan.
 
If you're having trouble getting approved for a personal loan, you'll want to check Austin Roofing and Construction can offer because even if you have to pay a slightly higher interest rate than people with excellent credit, these companies can usually get everyone approved. We know how much you need a new roof and we will do everything within our power to help you afford it. When you get your loan through us, we can start on your roof right away!
 
 

#2 Shop Around

You should never accept the first loan offer you get unless you've compared it to several others and know you're getting a good deal. This is because each lender has different criteria for approving borrowers. At one lender, your credit score might be considered poor, but at another lender, it's on the low end of what is considered good. This could make a world of difference in the amount of interest you pay or if you even get approved.
 
The same is true for interest rates, which are not the exact same with all lenders. Rates will likely be comparable until they pull your credit score, but even base rates vary somewhat. Get quotes from several lenders to ensure you're able to choose the loan that makes the most sense for you. You also don't have to go through the same lender as you have for your mortgage, either, so keep that in mind as you shop around.
 
 
#3 Improve Your Credit

If you don't have a roofing emergency, you might have time to improve your credit somewhat before you seek financing, which can help you secure a better deal on your roof financing. The higher your credit score, the lower your rates will be, no matter which financing option you choose. All lenders will offer lower rates if you have proven that you're a lower credit risk through your credit rating. However, it does take time to increase your score.
 
Some ways to improve your credit include making on-time payments to your current creditors, becoming an authorized user on an existing unsecured credit card and using it responsibly, opening a secured credit card on your own and using it responsibly, and maintaining low credit card balances to improve your debt-to-income ratio. Check your credit score regularly and monitor the progress you're making until you feel like your score is high enough to get a great deal on your roof financing.
 
 
#4 Lower Your Debt-to-Income Ratio

As mentioned above, your debt-to-income ratio is a critical factor in your loan interest rates or whether you get approved at all. You want to keep your ratio as low as possible, with 35% being the maximum that most lenders will accept. This ratio is used to determine if you have enough income to pay for the additional debt should a loan be offered. There are two ways to lower your debt-to-income ratio to be in a better position for consideration.
 
The first way is to closely examine your budget and cut out anything you don't absolutely need. Use the savings you get from that process to pay down your current debt. The second way is to get another source of income, such as a second job or a side hustle. Extra income is probably the quickest way to improve your debt-to-income ratio, but make sure you'll be able to sustain this extra income after you get the loan.

 
No matter which financing option you select for your roof, there are several ways to ensure you get the best deal possible, including those listed here. Of course, you need to start somewhere, especially if you're in a situation where you need a new roof immediately. Contact Austin Roofing and Construction today to see how we can help you get financed quickly and easily. Approval is right around the corner!