Surprise Home Repairs? Here's the Best Ways to Pay for Them

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  • Paying for unexpected repair costs can be a challenge.
  • Keeping interest costs down should be a top priority.
  • There are several options for funding repairs, including smart ways to borrow.

The right choice will depend on your needs.

Unexpected home repairs can happen to any property owner and they can sometimes cost a substantial amount of money. If that occurs, you'll need to decide on the best way to pay for them.

The good news is, you have multiple options for funding the repairs your home needs. The right approach is going to depend on your specific situation as well as the length of time it may take you to cover the costs of the fixes.

Here are three of the best options for paying to repair your property.

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1. Emergency savings

If you have an emergency fund, using it to cover your home repair costs could help you get the repairs done as quickly as possible. You won't have to wait for loan approval or take the time to look for financing options. And you also won't need to worry about getting stuck paying bills for the repairs long into the future, which affects your ongoing financial flexibility.

Of course, there are downsides to using emergency savings to fund your repairs. If you drain your emergency account, you won't have money if another unexpected expense comes along soon after the repairs happen. If you lose your job, for example, it could be hard to pay the mortgage if you have no emergency fund left -- especially since you can't easily borrow for mortgage bills.

You'll also need to work on rebuilding your emergency fund ASAP, which affects future financial goals as well. Still, for most people, the chance to save on interest and avoid committing to ongoing monthly payments makes emergency savings the best option -- as long as you have enough set aside to cover the repair costs.

2. A 0% APR card

A credit card with a promotional 0% APR is another good alternative for paying for emergency home repairs, but only in limited situations.

A 0% APR card is one that offers a 0% promotional rate for a limited period of time (usually around 12 to 15 months). If you make purchases within that time frame, you won't have to pay any interest -- as long as you pay off the balance before the promotional rate expires.

This can be a good option since you won't incur added financing costs. But the downside is that you'll need to be sure you can repay the full balance before the 0% rate expires to avoid getting stuck paying very high interest for your repair costs. You could also temporarily hurt your credit score if you max out a card to fund repairs (or charge more than 30% of the available balance) since credit utilization ratio is an important factor in your credit score.

Not all repair professionals take credit cards, though -- and you may not have enough credit available or enough money to fully repay the debt before the high rate kicks in. If so, then this approach wouldn't work for you.

3. A personal loan

Finally, a personal loan could be another good way to fund surprise home repairs. If you choose a fixed rate loan, there won't be any surprises in monthly payment or interest rate, and the rate should be below the standard rate on a credit card.

Personal loans can take time to get approved for, though, and you will have to commit future income to paying principal and interest payments. But if it will take a while to pay off the repairs and you want to keep interest low, a personal loan could be the best approach.

The important thing is to consider each of these options carefully and make a fully informed choice about which financing method makes the most sense for your situation when surprise repairs crop up.

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