Financing Major Home Repairs
Because I believe in being authentic on this blog, I’m sometimes going to talk about the M-word. Money. Just because it can be an uncomfortable topic doesn’t mean it should be. We should all feel comfortable discussing our money! Money isn’t a moral good or bad. It’s just money. Besides, only when we are more open about what is happening with our money can we find out that we’re either making great choices or being totally scammed. I’m not sending any money to overseas princes, and I don’t want you to, either!
With that little soap box out of the way, today’s topic is how to go about financing major home repairs. My husband and I have been trying to have our furnace and air conditioner replaced for about four months now. Our repair tech told us it was on borrowed time, which we knew. The furnace was thirty years old, and that wasn’t a surprise to us. But we decided to limp the system along while we figured out which new system we wanted to get and the best way to pay for it, reasoning that if we had to take the first thing available, we would likely spend too much and not get exactly what we wanted. With a major expense that’s going to live in our house for a decade or more, we wanted to be sure! So, we started looking.
Tip 1: Check out a few different companies before choosing one.
We had several different people out to our house while we were trying to get the furnace fixed, and we learned that not all technicians are created – or educated – equally. While everyone we spoke to was nice, more or less, some were clearly more experienced and took more pride in doing things the proper way. Decide what’s most important to you and keep it in mind when you’re looking for your final choice. We decided we were willing to spend a bit more to get great customer service and an HVAC company who stands behind their products. But there are all kinds of options out there depending on your specific priorities. Don’t choose the first name in the search list or the phone book. Shop around. Read reviews. And that leads me to my next point….
Tip 2: Call your realtor.
When our realtor helped us to purchase our house a few years ago, we knew she was knowledgeable. But when we called her to ask some questions about having our house reappraised for financing purposes, she had a lot more to say than just details about home values. She also knew every HVAC company in the area by reputation and by work quality, and she gave us a name of a company she liked. We ended up going with that company, and have been thrilled with their work. We wouldn’t have found them on our own, since they hadn’t showed up on our internet search, but we’re so glad she gave us her recommendation.
Tip 3: Don’t be afraid to bail on your bank.
Our first thought was to do the financing through the bank that holds our mortgage. It didn’t end up working out, in large part because they were extremely difficult to communicate with. We ended up going with a much smaller local credit union instead of our bank, and not only was our interest rate better, but they were so easy to work with that we were surprised at every turn. Sometimes, you’ll get better terms if you finance through the bank that holds your mortgage, but not always. It’s worth checking around to see who has better terms – and better service.
Tip 4: Do NOT use credit card or company financing.
If at all possible, don’t put purchases this large on a credit card. The company financing often amounts to a credit card, with the same astronomically large interest rates, so I’m putting those into the same category. If you possibly can, finance through a bank or credit union. You’ll likely get a much better interest rate, which means it costs you less money in the long run. Our loan officer ran some numbers for us, and we stand to save nearly $18,000 just in interest by exploring the options our credit union recommended. We’re so thankful we had time to shop around!
Tip 5: Plan for big purchases, even if you have to finance them.
It would have been great if we had time to save up enough to pay cash for our new furnace and air conditioner (and the ductwork, and the venting, and, and, and…), but realistically, we didn’t. It would have cost us much more in repair bills to try to hold on to the old system that long, eating up what we were able to save. And then we still would have had to buy a new furnace at the end anyway! By financing it and doing it when we needed to rather than when we absolutely had to, we saved quite a bit of money and are going to start receiving some savings on our energy bill in addition, helping us pay off the loan even faster. We’re also going to be looking into getting a rebate from our energy supplier, because the new system is vastly more energy efficient than the thirty-year-old one; again, leading to a faster loan payoff and less money spent on repair bills in the meantime.
In summary, I’m still not excited that we had to spend so much money, and that we had to borrow to make it happen. But we’re new home owners, and we don’t have that kind of money saved back up yet. However, what we do have is peace of mind that we’re not going to have a dangerous furnace issue, energy savings helping us chip away at the loan, and an HVAC company we trust to treat our concerns with care and respect. All in all, we’re far better off than we were before.
If you own a home, or even if you don’t, you may find yourself with large repair bills. Following these tips and learning from our experiences may help you avoid costly mistakes and keep more of your money in your pocket.