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It may not be a bad idea, but there are other options to consider.
Key points
- Many people can’t pay for home repairs outright.
- If you need to finance a large repair, a personal loan could be a good solution, but it’s not your only one.
Home repairs can pop up when you least expect them. And sometimes, they can be very expensive — so much so that you can’t simply dip into your savings account and pull out the money to cover their cost. For example, if your air conditioning or heating system goes, you could be facing repairs that cost upward of $10,000. And if you end up needing a new roof due to extensive damage, your bill could be similarly high.
When you’re stuck with a home repair you need to pay off over time, you have options. And one you may want to consider is a personal loan. But is that the best choice for financing home repairs?
The upside of using a personal loan
A personal loan lets you borrow money for any purpose, and the higher your credit score, the greater your chances of snagging an affordable borrowing rate. Personal loans also tend to close quickly, so you might easily have your money within a week of getting approved (and sometimes within days). That’s convenient when you’re looking at a home repair that needs to be tackled immediately.
Plus, when you take out a personal loan, you’re generally locking in a fixed interest rate on the sum you borrow. That makes your payments under that loan nice and predictable, and you won’t have to worry about them rising over time.
Is there a better option?
A personal loan can be a great way to cover a home repair in a pinch. But before you go that route, it’s worth seeing if you can borrow against your home.
These days, U.S. homeowners have a lot of equity in their homes to tap, since property values are up on a national level. And if you borrow against your home, you might snag a lower interest rate than what you’ll get with a personal loan.
That said, if you’re going to borrow against your home, you’re better off with a home equity loan than a home equity line of credit, or HELOC. That’s because home equity loans, like personal loans, …….