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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
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Both home equity loans and HELOCs allow you to tap into your home equity to borrow money, using your home as collateral. Home equity loans are lump sum installment loans that typically come with a fixed repayment period. HELOCs are more flexible, providing a line of credit similar to a credit card from which the borrower can draw as needed.
Home equity loans and HELOCs can be used for virtually any purpose, including funding emergency home repairs. On average, Americans spent $2,231 on emergency home repairs in 2021, a 42 percent increase from 2020. In addition, homeowners have gained significant equity in the past couple of years due to a competitive housing market. The average homeowner with a mortgage has $185,000 in equity.
As repair costs rise and homeowners have more equity to tap into, it makes sense to use home equity to pay for emergency home repairs.
Emergency repair costs can vary depending on the size of your home, the area where you live and the damage’s extent. It is difficult to pinpoint the exact cost of some emergency repairs such as fire/smoke damage due to the unpredictable nature of these events. However, some repairs are more expensive than others. Here is a breakdown of some of the most common emergency home repairs and how much they might cost.
Roof repairs, HVAC replacement and septic tank replacement tend to be some of the most expensive emergency repairs on average. However, all of the repairs listed above could be extremely costly depending on the extent of the damage and the size of your home.
Repairing your home’s foundation could cost anywhere from $500 to $40,000 depending on the repairs needed and the size of your home. The average cost of a foundation repair is $4,488. If you just have a minor crack, you might pay around $500, but if you need a major foundation repair, you will likely pay at least $10,000.
There are some preventative measures you can take to avoid major foundation problems:
Roof repairs are some of the most costly emergency repairs, with an average cost of $8,600. The cost of this project varies significantly depending on the size of your home and the extent of the damage. Replacing the entire roof is much more expensive than repairing your existing roof. Fully replacing a roof could cost anywhere from $3,000 all the way up to $40,000 depending on the size of your home and the materials used.
To prevent roof damage, you can do some simple tasks:
The cost of repairing water damage is extremely variable, but the average water damage repair is around $3,030. Water damage can happen in a variety of ways, including flooding, a burst pipe, a leaky roof, clogged gutters, sewage backup, rotted siding or a broken fixture such as a bathtub or toilet.
The cost of water damage repairs depends on the extent of the damage. If you have to remodel your entire bathroom, for example, that’s going to be more expensive than replacing an exposed drain. The earlier you identify water damage, the easier and less expensive it will be to repair.
There are several things you can do to check for and prevent water damage:
The average cost of mold removal is around $2,347, but the actual cost depends largely on the extent of the damage. You could pay as little as $60 to repair mold damage or as much as $6,333. If you manage to catch the mold early on, you might be able to save yourself thousands in costly repairs.
Mold can be spot-treated by cleaning and thoroughly drying the wet/molded area. However, this only stops the mold from growing. To get rid of mold spores, you will likely need to hire a professional and improve ventilation in your home to prevent humidity. Left untreated, mold can lead to costly repairs such as replacing walls in your home.
To identify and prevent mold in your home, you should do the following:
Replacing your HVAC can be extremely costly, costing an average of $7,000. HVAC systems are notoriously complex and expensive to repair.
Replacing individual parts on your HVAC when you notice the problem is a lot less expensive than replacing the system if you ignore the problem for too long. The typical HVAC system lasts about 15 years, but only when properly maintained.
Here are some things you can do to keep your HVAC system running and prevent costly repairs:
Other events or situations can also necessitate emergency repairs. Some common ones can include:
The best way to avoid these is to be aware of warning signs and keep on top of maintenance, but most homeowners will experience an unexpected repair at some point.
If you have a significant amount of equity built up in your home and you are facing an emergency repair, tapping into that home equity could be a great way to finance the project. However, there are several things you should consider before making a decision.
Home equity loans and lines of credit are secured, meaning that your home is used as collateral. Secured loans typically have lower interest rates and better terms, but you run the risk of losing your home if you default on the loan.
You should also keep an eye on the housing market before taking out a home equity loan or line of credit. Your home’s equity is variable and may change depending on the housing market. This means that you could end up pouring money into your home only for its value to sharply decline. Take a closer look at the pros and cons of both home equity loans and HELOCs before deciding to use this financing method.
Home equity loans allow you to take out a lump sum of money that you pay back over a set repayment period. Home equity loans have fixed interest rates and monthly payments, so there will be no surprises. Depending on your home’s market value, your mortgage balance, and eligibility requirements such as your credit score, you can borrow up to 80-90 percent of your home’s value.
Tapping into your home’s equity all at once can leave you at risk of losing money over time. If you borrow up to 80 percent of your home’s equity and property values in your area go down, you could owe more money than your home is worth. Even worse, if you find yourself unable to make monthly payments, you could lose your home altogether.
A home equity loan could be the way to go if you need a large sum of money for an emergency repair. However, you should only borrow against your home’s equity if you are certain you will be able to pay the loan back.
HELOCs are more like credit cards, a revolving line of credit that you can draw from up to a predetermined limit. Once you pay it back, you can begin drawing from it again. HELOCs have variable interest rates, meaning that your rate could change at any time depending on the financial climate.
The major benefit of HELOCs over home equity loans is that you can take out cash on a revolving basis instead of taking out a lump sum. This allows you to only borrow what you need when you need it without getting into unnecessary debt. However, this also means that you need to be diligent about keeping track of your spending. With a variable interest rate and revolving credit, your payments might differ from month to month. Make sure you are only borrowing what you need and that you will be able to pay it back on time, accounting for interest.
If you need to make an emergency repair but are unsure exactly how much it will cost, a HELOC could be a great way to tap into your home’s equity without taking on too much debt. Always keep in mind that tapping into your home’s equity puts you at risk for foreclosure, so you should only do it if you are certain you can pay it back.
If you are looking to finance an emergency repair and you do not want to take out a home equity loan or line of credit, consider the following options.
Owning a home can be expensive, especially when emergency repairs arise. As inflation and supply demands rise, so does the average cost of common emergency home repairs. While homeowners are grappling with these rising costs, they also have an opportunity to take advantage of a competitive housing market and rising home equity.
Using a home equity product to finance emergency repairs could be an excellent decision in the current housing market. However, borrowers with low credit or high debt-to-income ratios may have a harder time qualifying for these products. These borrowers may need to look into other options like non-profit organizations or other ways to make emergency repairs.
If you decide that a home equity loan is the best option to pay for emergency repairs, compare top lenders before deciding on one.
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