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It happens to many at some point in their life, and that could include you: Disaster strikes and the house takes a beating, resulting in a caved-in roof, water damage, or busted walls and windows. Even if the whole family makes it through the event safely, you might find yourself with nowhere to live. Spending weeks or months sleeping at a motel is far from ideal, so repairs need to be done quickly, and that takes money. However, homeowners insurance doesn’t cover damage due to floods, landslides and earthquakes, which could leave you out in the cold.
So, what are your financing options? After all, $10,400 is about what it costs on average to pay for major home renovations in the United States, and that’s a serious chunk of change. While there’s no magic bullet, there are ways forward.
Seek Special Policies
It may be well worth ponying up for coverage if you live in an area that’s prone to floods, earthquakes or landslides. Landslide insurance often requires a separate policy, even though movements of mud are usually the result of an earthquake. Which policy covers what may actually come down to what the landslide consists of, mostly land or mostly water, as well as the nature of the damage. It’s confusing, so talk to an expert.
Worry Less with a Warranty
Home warranties fill in the void between regular homeowners insurance and certain types of damage that aren’t covered. Those include malfunctions in mechanical systems and appliances, for example, but not major structural issues. It’s somewhat limited in scope, though it could help you move back into a functioning home a lot more quickly.
Set Up an Emergency Fund
Remember that $10,400 figure? That’s something to aim for, though it may not be enough in some cases or too much in others. You’d be ahead of the curve, as more than half of Americans could only cover up to $2,000 in emergency expenses using their savings, according to research from the Pew Charitable Trusts. Get used to putting a little money into a separate bank account every month, and you’ll get where you want to be soon enough.
Land a Loan
You should only take out a home equity line of credit if the damage is a genuine risk to your safety and not something cosmetic, according to a writer with the Balance. That’s because of the risk of defaulting, which is substantial. You could actually lose your home even if you stay up to date on your mortgage but neglect payments on the loan. Think twice before signing on the dotted line.
Refinance Your Mortgage
This allows you to negotiate for a lower interest rate when paying back the mortgage or take a payment that could be used to fund home repairs in a pinch. Whether or not that’s the best option depends on how much of the loan you’ve paid off, how high the interest rate is, and the extent of the damage in dollar terms. Bear in mind that it’s possible to end up with lower interest payments and cash.
Get a Grant
The government could be your lifeline if you and your family are eligible to receive funds for your renovation from the Federal Emergency Management Agency (FEMA) or the Department of Veterans Affairs due to a natural disaster, according to Free Financial Help Paying Bills. It’s also worth contacting the Department of Housing and Urban Development for information on grants they have on offer.
Find a Qualified Contractor
This doesn’t do much to provide financing, but certainly saves you money. You’re looking for someone who’s highly qualified but with rates that don’t suck up all of your available resources. Begin by getting references from friends, family or the local builders’ association, then follow up by interviewing individual candidates. Don’t be shy about visiting their worksites to see how they operate.
There’s a good chance you’ll use a combination of these methods to fund your repairs, if that’s even necessary. No matter what, make plans now, as disasters wait for nobody.
Author: Suzie Wilson of Happier Home, an interior designer with a passion to help people organize and style their homes so they’re not only beautiful, but offer a relaxing, stress-free environment to every member of their family.
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