As a financier and homeowner, you’ve likely researched potential renovations to your home and how best to pay for them. There are two basic options, either use credit or save up and pay for renovations as you can afford them out of pocket, but there are plenty of nuances within those plans which offer other options, some of which are better from a pure business perspective and others make more sense as to your comfort while living in the home.
Storm Damage and Insurance
Storm damage is typically covered by insurance, although it depends somewhat on your deductible. You may have other reasons not to use insurance for a simple repair. Most commonly, someone may want to pay out of pocket for a repair they can afford to keep their rates down until a more dire emergency comes up. Don’t be afraid to use your insurance if you have to, but the best option is to discuss the situation with your insurance agent and make an informed decision as to whether you want to pay for an immediate repair out of pocket, with a separate loan, or through your insurance based on what is going to best serve your future financial interests.
Any accountant will agree it’s always a good idea to set aside a specific maintenance budget for unexpected repairs as they come up. The term “unexpected repair” is somewhat redundant, as repairs are almost never expected. The maintenance budget can cover the expense when it comes up, and can also take care of regular inspections and routine maintenance, which will of themselves lower the risk of a more expensive repair coming up when you can’t afford to conduct a major unplanned construction project.
In-House or Bank Financing
Once you understand the options available through your insurance company and have the maintenance budget established, you’re in the best possible position for either repairs or renovations. You’re fiscally responsible, so can discuss different loans with your bank, whether based on your equity in the building or your own personal credit. You have money set aside to assure your loan, which may allow for better interest rates while the money earns through investment, or a contractor can argue a structural need for renovations which you can present to your insurance agent. It goes without saying in any conversation concerning finances, the more options you have available the better negotiating power you have.