If you are a homeowner, you will likely have some home repair projects or home improvement goals on your mind. And depending on the type of work needed, paying out of pocket may not be possible. This is where home repair loans, also sometimes called home renovation loans, come in. Home repair loans make it possible to finance a large home project. They can come from several different places. However, getting a loan can be challenging if you have bad credit. The good news is that there are several loan options out there that can help you get funding for home repairs, even if you have bad credit.
Most Common Home Repairs and Their Costs
If you are a new homeowner or haven’t had any home repairs done, you may be unsure about the average cost of things. Here are some common home repairs and some home improvements people make, along with their average prices:
Common Home Repairs:
Roof Repairs
Roof repairs don’t need to be done for many years after a new roof installation—one reason why secondary owners often end up having to pay for the repairs. In addition to time, things like weather damage can be another cause for a roof repair. Depending on the size of your home and the material you use, roof work can cost anywhere between a few hundred dollars for repairs to approximately $10,000 for a whole roof replacement.
Window Replacements or Repairs
Windows are an important part of keeping your home energy efficient. A broken window can also be a safety hazard. The average window repair cost ranges between $300 to $850. A replacement can be up to around $1,500.
Water Heater Repairs
A water heater heats the water in your home, and you may not even think about this appliance until it is broken. In general, water heaters can last between five to 10 years. If your water heater needs repair, you can expect around $500 for a repair and up to $1,300 to replace it.
Home Foundation
Foundation repairs can be an emergency and, unfortunately, can be one of the most expensive repairs on a home. The average cost for foundation repair is $5,000, but that number can increase if your home is large.
Siding/Exterior Maintenance
Just like a roof, the exterior wall of your home can be severely damaged due to weather. Depending on what material your home’s exterior is constructed from, repairs can cost a few hundred dollars up to a few thousand dollars.
Plumbing and Pipes
Plumbing and pipe issues are another one that can arise, especially in older homes. The average visit from a plumber can cost anywhere from $45 to $300.
Some Common Improvements:
Adding a Pool
A pool can be a great way to add value to a home and an enjoyable experience for homeowners. These are a few reasons why adding a pool to a home is pretty common and you’ll often find loans specifically to finance a pool. Pool costs will start around $3,000, and they go up significantly from here depending on things like materials and additions.
New Flooring and Paint
Flooring and paint are relatively easy ways to change the look of a home and are common endeavors that many new homeowners take on on their own. Your flooring choice, the size of your home, and installation costs will determine the flooring price but expect to pay a few thousand dollars. For paint, the coverage, type of paint, and whether you are hiring someone else will determine costs. Paint can cost a few hundred dollars up to a few thousand.
Upgrading Bathrooms
Bathrooms are an important part of every home, and many people like to modernize them for value and aesthetics. Bathroom repairs can cost anywhere from a few hundred to a few thousand.
Upgrading a Kitchen
For many people, a kitchen is the center of the home. Total kitchen renovations, including appliances, can cost between $15,000 to $30,000.
Loan Options for Home Repairs With a Bad Credit Score
Now that you know about some of the average costs for average home repairs, you can be better equipped when looking for a bad credit loan. Here are some options you can consider with low credit:
Home Equity Loans
Home equity loans use the value of a home to secure funding. Because a home is involved as an asset, having bad credit is okay—you can still get a home equity loan. Often a home equity loan will fall under the umbrella of home improvement loans. The loan amount will depend on your home’s value, income, and ability to repay a loan. Home equity loans are some of the most popular loan options for home repairs.
A Home Equity Line of Credit or HELOC
Home equity lines of credit work similarly to home equity loans in that you borrow from your home’s equity. Also, like home equity loans, there won’t be a focus on a minimum credit score requirement since a HELOC is a secured loan. Instead of focusing on credit score, lenders will pay attention to your income and ability to pay the loan. The main difference between a home equity loan and a line of credit is that with a HELOC, you can borrow multiple times until you hit your credit limit rather than getting a lump sum loan amount.
A HELOC will work well if you are unsure how much you need to spend or if your expenses are split up over time. While a home equity loan will work better for you if you need large payment upfront.
Bad Credit Personal Loans
Personal loans are some of the most versatile loan options available. You can find them at banks, credit unions, or online lenders. They can come in various amounts, interest rates, repayment terms, and be used for various expenses. Although a standard personal loan will be challenging with poor credit, bad credit loans are available. You can also look into secured loans for an easier time of approval than unsecured personal loans. Like a home equity loan, a personal loan is also often categorized as a home improvement loan or may be called a personal home improvement loan. With these loans, you’ll likely repay your loan in fixed monthly payments.
Consider Adding a Cosigner or Co-borrower for Easier Approval With Bad Credit
With bad credit, it can be tough to get approval in general, and even with approval, a single loan may not be enough funds to cover the cost of your expenses. The good news is that adding a cosigner or co-borrower to your loan can help increase your chances of approval and a higher loan amount. A cosigner can be added to your loan as security for the lender. If you don’t pay back the loan, the cosigner will need to. While a co-borrower will be equally responsible for repayment from the get-go. If you own a home with another person, it will make sense to add them as a co-borrower. Keep in mind that your cosigner and co-borrower will need good credit and income to be helpful.
Loans From the Federal Housing Administration
If you don’t have a ton of equity in your home, you can look into an FHA Title I loan. With an FHA Title I Loan, the government will provide security to your lender. And so, for loans under $7,500, you won’t need a cosigner, and the loan can be an unsecured loan even with bad credit. These loans can cover all kinds of home improvement projects and additions, including appliances and exterior or interior projects.
Loan Options to Avoid
When looking for home improvement loans, you’ll find a good amount of low credit score options, including the ones from above. However, there are some options you should avoid. The main reason is that they can lead to a cycle of debt, look bad on your credit reports from all three major credit bureaus, and can hurt your credit scores and credit history. Here are some loans that you may come across that should be avoided:
Payday Loans
Payday loans are extremely short-term bad credit loan options. They make a few hundred dollars available that must be paid back in just a few weeks. One major downside of payday loans is that they come with extremely high-interest rates. These rates, coupled with a short loan term, make it really easy to miss payments or default. These actions will show up on your credit report and hurt your score.
Car Title Loans
Car title loans are secured loans that use a borrower’s vehicle as collateral. Instead of focusing on credit, lenders will pay attention to the borrower’s income and ability to repay a loan. The major downside of these loans is their high-interest rates and fees. You also risk losing your vehicle if you cannot repay the loan.
No Credit Check Loans
Sometimes you will find loan options labeled as credit check loans. Although these loans may sound convenient, they are not a good choice, especially for home improvements; the loan amounts will be small, and interest rates will be high.
Contacting Your Home Insurance Company
If you have home insurance coverage, your insurance may partially or fully cover some home repairs. And so before spending any of your own money, be sure to contact your insurance company, especially after something like weather damage.
In-House Financing Options for Home Repairs
Sometimes you may be able to get in-house financing from a contractor. This can be helpful in cases of a bad credit score because often, your credit will not be looked at. You will have to repay your contractor in monthly installments until the amount is due is paid in full. You will likely not have to pay any interest on this financing. However, the credit process and interest will be involved if your contractor uses third-party financing.
References:
What Are the Most Common Home Repairs? | Home Repair Ninja
5 common home repairs (and how much they cost) | The Zebra
Fixing Up Your Home and How to Finance It | HUD.gov / U.S. Department of Housing and Urban Development (HUD)