How would you take equity from a home to pay for a major repair?

Submitted by ReddittorMan t3_11eivl3 in personalfinance

Im concerned about the condition of my roof and it has recommended for me to buy a new one (home inspector said so at time of purchase 3 years ago also got a few quotes and roofers said the same).

I could potentially use mutual fund investment intended for retirement. Instead should I look into getting a line of credit or second loan or something?

I think a refi would be out of question as I got a super low rate and want to carry that through end of the loan.

1

Comments

You must log in or register to comment.

thisismyusername51 t1_jae9jhw wrote

Reach out to your home owner's insurance. They will often pay (minus a deductible) to have your roof redone because they know that once the roof goes, the whole house goes. We had ours done a few years ago and it only cost us $1k.

4

ReddittorMan OP t1_jaeawet wrote

Wow that sounds too good to be true! I’ll certainly give it a try though!

1

GardenGood2Grow t1_jaebxjg wrote

Unless there is damage because of a weather event I have never heard of this. Sounds unrealistic.

4

ReddittorMan OP t1_jaeciv1 wrote

It wasn’t damaged by any specific event. It just is really old, possibly the same roof from late 50’s

1

GardenGood2Grow t1_jaeenkz wrote

As soon as you call insurance it opens a claim whether you use it or not. 3 claims in a year and you are sent to a high risk insurer for triple the cost. They are for disasters, not wear and tear.

4

Kind_Tangerine2190 t1_jaedxi4 wrote

Do you have equity in the home at this point? If so, I would look at a HELOC or home equity loan, not a refi. A HELOC or equity loan would just be for the amount of equity you have built up in the home over the last 3 years and hopefully would cover a roof replacement. A refi would probably cost you way too much at this point and raise your interest rate on your entire mortgage to todays rates. If I had to do this, I would much rather only be paying a higher interest rate on a HELOC or home equity loan and pay it off as quickly as you can to have it gone quickly. I am considering this for some home improvements we were planning on making in 2024. I will be taking out a home equity loan of $50k for 15 years, but will make triple the payments to get it paid off early with less interest.

3

ReddittorMan OP t1_jaeo9de wrote

Sounds like the HELOC is the way to go. You say I would be limited to the amount of principal payments made over the last 3 years? I had a higher than normal down payment plus almost 20% appreciation (according to Zillow I know that probably way exaggerated) so there the loan balance is now probably less than half of the market value of the home

1

ReddittorMan OP t1_jaed2us wrote

Seems like it would be unwise to just wait until it really fails and then make a claim? I haven’t noticed any leaks but the attic is super cramped and filled with ducts/insulation so it would be hard to catch a leak early.

2