What if I Can't Afford the Home Repair?

Home Improvement

Owning a home is a big responsibility and it needs maintenance from time to time. But what if you're planning on selling your home and it need some serious work that you just can afford? What can you do?

#1. Use home equity.

The equity in a home is the dollar amount between how much the home is worth currently and how much you owe. For instance, if the home is currently worth $500,000 and you owe $300,000 on it, you have $200,000 equity. You may be able to tap into that equity with either a HELOC (home equity line of credit) or by refinancing and pulling cash out. You don't necessarily have to pull out all your equity, but enough might be able to provide the repairs you need. Most lenders will not offer a refinance or home equity loan on more than 60% to 80% of the equity. So for instance, if you owe $300,000 on a $500,000 home you can only borrow up to $100,000.

#2. Refinance and cash out.

Instead of using a HELOC, you can simply refinance your entire loan. This means paying off your existing loan and reissuing a brand-new loan with new terms and interest rates. One of the nice things about a complete refinance is that you usually get to skip at least one full mortgage payment, which might be a nice cushion for extra repairs or catching up on bills.

#3. Government assistance.

If the home needs repairs as a result of a natural disaster, you may be eligible for financial assistance. FEMA, Federal Emergency Management Agency, can offer emergency home repairs as long as your income requirements meet eligibility.

#4. Sell as-is.

Not everyone likes to do this but it's not uncommon. If you simply cannot make repairs and you'll need to price the home accordingly. The home will need to be sold as-is, meaning that you are unable to complete any repairs or updates. This is not that bad as many investors are specifically looking for these types of homes. However, you may not receive the full value of what the home could be worth if all the repairs were completed.

If you're looking at a home that needs to be sold and you'd like more information on what it's currently worth and what it could be worse, give me a call today. We work throughout the Palm Desert and Palm Springs area and would love to give you a free quote on what your home is currently worth.

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