How to Finance a Roof Replacement

A roof replacement can be a major expense costing thousands of dollars. Fortunately, obtaining financing may be easy if you have good credit. Credit scores of 720 and higher usually get you the lowest interest rates on loans, according to Privacy Rights Clearinghouse, a nonprofit consumer information company. Financing for your roof replacement may be available with lower credit scores as well, but expect higher interest rates, especially if your score is below 620, the cutoff for "good credit," according to Privacy Rights. Whatever your score, banks and credit unions are likely to provide better deals on financing than the roofing company --- a good reason to shop carefully for the financing.

Instructions

1

Review your credit report and score. Order the credit report from AnnualCreditReport.com, the only website endorsed by the Federal Trade Commission to offer free reports under the terms of the Fair Credit Reporting Act. You're entitled to three free reports a year --- one from each of the major credit-reporting bureaus. Order your credit score separately, for a fee. Reviewing your credit report and score will help you decide if now is the best time to seek financing for a roof replacement or if you should delay the task while improving your credit.

2

Apply for a home equity loan or tap into an existing home equity credit line. Using a home equity loan to finance a roof replacement is a smart financial move because you are using the money to improve your house and, you hope, increase its value.

3

Arrange for financing with an installment loan from your bank or credit union if a home equity loan is not an option. Installment loans often offer lower interest rates than credit cards, and you'll have a set monthly payment. The bank may even offer special rates on so-called home improvement loans.

4

Finance the roof replacement with a credit card if there are no other options. Use an existing card or apply for a new one with a large enough credit line to pay for the roof replacement. Credit cards should be a last resort, however, because they usually have higher interest rates than other forms of financing.