What to Do When Faced With Major Home Repairs

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A few simple steps can help you make the fixes you need.

While there are many benefits to homeownership, there are also downsides. And one of the biggest disadvantages of owning is coping with the cost of repairs.

Often things go wrong unexpectedly in your home, and you have to fix them right away. If there's a big problem, this could be an expensive and complicated proposition. If you're looking at major home repairs, take these key steps.

1. Take stock of your situation

First things first: Consider where you stand when it comes to your home repair. Is your house livable before the repairs are made? Do you need to do them immediately to stay safely and comfortably in your property?

Do you have a relationship with contractors who can help you make fixes? And do you have money saved to pay for your repairs?

2. Check your insurance coverage

In some cases, you need major home repairs after a disaster that's covered by your homeowners insurance. For example, if you have a fire in your home that destroys your kitchen, it's likely your insurance policy covers the costs of repairs.

If your insurance pays, dealing with the repair process can be very different. Reach out to your insurer to find out about getting an estimate for repairs and to check the rules for reimbursement and which contractors you can work with.

3. Research contractors

You may need a contractor to oversee major repairs -- but finding one may not be easy. In the current high-priced real estate market, many people repair their properties instead of buying new ones.

The quality of your contractor can make or break your project and have a huge impact on construction costs, so make a smart choice about who to work with. Ask coworkers, friends, and neighbors for referrals. If they don't have any, ask at your local lumber yard or plumbing supply house.

When you're considering a contractor, read reviews and ask lots of questions. You want to feel confident working together on your home improvement project.

4. Compare quotes

Getting an idea of what contractors are likely to charge helps you set your project budget and determine who to hire. It's a good idea to get several quotes to make sure you're getting a fair price. Compare apples to apples by checking whether construction quotes include the same amount of work, using the same type and quality of materials.

5. Explore your financing options

Once you know how much your project will cost, figure out how to pay. For many people, it's impossible to pay out of pocket -- although that can be ideal, since you don't have to worry about paying interest or getting approved for a loan. Otherwise, you will likely have to secure a loan. Options include:

  • A second mortgage, home equity loan, or cash-out refinance loan. Each involves tapping into the equity in your home to cover your repairs. The upside is that interest costs may be lower than other borrowing options and, depending on the circumstances, could be tax-deductible. The downside is that closing costs can be expensive; the process of approval can take a long time; and your house is used as collateral, so is on the line if you can't pay.
  • A personal loan: Personal loans can also come with competitive interest rates, although not usually as low as the rates on home-related loan options. Approval time is much faster, though, and the closing costs may be minimal or non-existent.
  • Credit cards: Charging home repairs can be hugely expensive, because credit cards charge high interest rates. But you might consider putting fixes on your credit card if you plan to pay off the balance in full before interest is due, or if you have a 0% promotional rate on purchases and can pay before the promotional rate ends.

If you find the right loan, the right contractor, and the right price, you can increase the chances that your home improvement project goes off without a hitch.

Tired of all those repairs?: See The Ascent's guide on how much house you can afford and get into a new home.

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