If you have to borrow money to make a necessary home repair like replacing a roof or putting in energy efficient replacement windows, you will want to find the loan with the best rate and most favorable repayment terms. Since some repairs can not actually be delayed too long without risking additional damage, you may not be able to wait until your piggy bank is full enough to fund them. This means a loan.
Using a credit card or other type of unsecured debt is normally a really bad plan. If you think that you will have to declare bankruptcy when the payments on the repair bill start coming due, then, maybe a credit card is not such a bad deal. At least this will let you protect your home in court.
However, not very many people are really that unscrupulous when it comes to business dealings. Loans are made with the intention of repaying them in a timely manner. If this is the case, you want to avoid those high interest loans from institutions that have a tendency to be a bit predatory.
This means a home equity loan is a reasonable route for you to take. Repairs will add value back to your home. They may not give the same results as adding a room or remodeling the kitchen. However, if you were to put your home on the market needing some major repair work, it would lower the value and make it hard to sell. In this way, keeping up with repairs make economic sense.
Adding the cost of these repairs to the outstanding debt attached to your house will not take away from its value. While you will owe more money, you will also have a more valuable asset. Many times if the repairs are done properly, it can raise the value of the property by replacing lower quality with higher quality products.
Unsecured debt at a good rate will cost you about 8% to 20% in annual interest costs. A bad rate on home equity will usually not go beyond 10% and many are at 7% or less. With a home equity loan, you can get an amortization table to tell you where you are at any time in the repayment process. The rate is normally fixed for the term of the loan.
With unsecured debt, the fine print will usually tell you that the interest rate can be changed at the whim of the bank up to rate around 30% or more. Financially, it just makes much more sense to use an equity line or second mortgage to finance these large ticket repairs. With an equity line, you can get more money later without having to jump through the hoops of the first effort. Normally, these funds are available with a few days at the same rate as the original loan.