Ya know what isn’t really *up there* on the fun-o-meter of fun things to spend your money on? It’s foundation repair. Repairing your foundation is one of those invisible home projects that doesn’t have any gratifying wow factors to impress your friends and neighbors.
But alas, as a grown-up you have decided that it is worth getting foundation repairs done for the long-term stability of your home. (Bravo to you) Now you just need some guidance on how you can pay for it.
At Anchor Foundation Repair, we are living proof that foundation repair gets paid for. We can share what we have observed from 35+ years in the business on how homeowners commonly fund this type of repair.
This article will review 7 different ways to pay for foundation repair and offer guidance to get you started on whichever option you choose. Let the *fun* in *funding* begin!
7 Best Ways to Pay for Foundation Repairs
Some of these might seem super-obvious to you, but we are just listing it all in the spirit of thoroughness. They are in no particular order and we have no suggestion on which one is best for you, you’ve got to decide that one for yourself.
Here are the seven most common ways homeowners use to cover the costs for foundation repair.
- Payment Plans
- Third-Party Financing
- Financial Institution Loans
- Mortgage Refinancing
- Credit Cards
- Current Savings
- Savings Plan
In the coming sections, we will review each option and offer ways to get started, things to consider, and benefits or downsides to each.
1. Pay for Foundation Repairs with a Payment Plan
Many contractors set up a segmented payment schedule to collect foundation repair funds rather than asking for the entire sum all at once. It’s kind of like a time-compressed payment plan where they might ask for some money upfront, a little more later, and then a final payment when the job is done.
For example, on a foundation repair proposal with Anchor, we ask for 10% down, 25% on the project start date, 40% after a key point in the installation, and 25% at project end. Other contractors of all kinds do similar sorts of things.
Things to Consider When Using a Payment Plan
Paying in segments helps homeowners by allowing you a little time between payments to gather funds if needed. It also gives you a little peace of mind knowing that you won’t be handing over all the money at once before work even begins.
How to Get Started With a Payment Plan
Find out from your contractor what their specific payment terms are and you can develop a plan to meet each payment deadline. You might even pay for each payment segment by different methods that we will explore next.
2. Some Foundation Repair Contractors Offer Third-Party Financing
There are funding companies that partner with contractors to help homeowners get financing to pay for larger sum home repairs. Basically, instead of working with a bank, you are working with a loan company that specializes in repair or construction-type loans.
One such company is called Hearth but there could be others too. If your contractor has a partnership with Hearth, then you can apply for a loan through this third-party funding program. Hearth fronts you the funds to pay for the repairs and then you pay it back under their terms independently from the contractor.
Things to Consider With Third-Party Financing
Like a regular bank loan, you would have to qualify for it. The loan company would have its own criteria for qualifying. They would decide based on your credit score and other factors.
A funding company like Hearth typically has less-stringent equity or collateral requirements than your standard bank. It’s worth checking into if you need money quickly and have at least decent credit and job stability.
How To Get Started With Third-Party Financing
Ask your chosen contractor if they use Hearth or some other sort of financing program. Do some research on the interwebs on your own and see if any other similar third-party home repair financing companies serve your area and needs.
BTW, we don’t get any kickbacks or benefits from Hearth, just sharing information to help you out. Even when it is used by our customers, it is simply for the homeowner’s convenience and we do not receive anything for referring our clients to this company other than us getting paid for our usual services.
3. Financial Institution Loans to Pay for Home Repairs
Banks and credit unions typically have many different loan products. There are signature loans that essentially give you a loan because you have quite a bit of money in the bank already and they use that as the collateral. Or the institution might have some other kind of collateral-based loan to offer.
Things to Consider With Financial Institution Loans
This option for a loan might come with the most leg-work on your part. Banks usually need things like paycheck stubs, other bank statements, and other information that you have to provide to them. Give yourself plenty of time to work on a loan of this kind, things don’t always move fast in the banking world.
How To Get Started With Financial Institution Loans
If you have a great relationship with a local bank or credit union, that’s the best place to start. Larger banks might also have easy online applications where you can do most things via their website.
4. Refinancing Your Current Mortgage to Pay for Foundation Repairs
Refinancing your home loan with a cash-out option can be a great way to pay for many home repairs. A cash-out refi is best for you if mortgage rates are lower than when you got your original home loan, AND if your home has appreciated in value (that means it would sell for more now than when you bought it).
Also important to make a cash-out refi worthwhile is that you plan to stay in your home and not sell it anytime soon.
With a cash-out refinance, you take out a mortgage at a higher amount than your original mortgage. Then you pay off the old loan and have funds left over to cover the foundation repair costs. The mortgage company uses the increased value in your home as collateral for the loan.
With mortgage rates continuing to be good for homeowners, the chances are positive that you could get a better loan rate as well.
Things To Consider With a Cash-Out Refi Mortgage
A refi does also come with legwork and the need for time. It’s not something you can rush. You’re basically applying for a home loan all over again and would need all the same kinds of documentation and meet requirements as before. Your house also needs to be re-appraised so that’s a whole thing too.
Keep in mind that there are processing fees and closing costs with a refi mortgage just like there was for the original mortgage. These extra costs could add a few thousand dollars to the loan amount. They are typically rolled into the loan and mortgage payments, so at least you don’t have to come up with the funds outside of the loan.
How To Get Started With a Cash-Out Refi Mortgage
The best place to start with a refi is by contacting your current mortgage company. They would rather refinance your loan for more money at a new rate than lose your business altogether.
5. Pay for Foundation Repairs with One or More Credit Cards
If you have credit cards, they are an extremely quick way to pay for larger transactions. You can use one or more than one card to pay for urgent repairs. Just keep in mind that credit card interest rates are likely going to be higher than a standard loan.
Things To Consider with Credit Cards
Credit cards are something that you want to be responsible with, for sure. Don’t get yourself into a situation where you can’t make the payments. But credit cards do offer the major benefit of being no-hassle if you have enough available credit. There’s no application process, work, or wait time.
If you don’t have enough room on one card, you could use different cards for each of the segmented payments to your contractor if needed. Just be sure that your contractor takes credit card payments too. They might charge a higher amount for credit card transactions to cover processing fees from the card companies.
Bonus: you may even get cash back, travel points, or accumulate some other card benefit depending on the type of credit cards you have.
How To Get Started with Paying By Credit Cards
I can’t believe I have to say this, but again in the spirit of thoroughness, I will. Open your wallet and charge away!
6. Use Your Savings Account to Cover the Foundation Repair Bill
In a perfect world, we all have an ample savings account balance for emergencies. If you are fortunate enough to have funds already in the bank, why not use them for something as important as the future stability of your home?
Things To Consider with Using Your Savings
Again, foundation repair is not the *funnest thing* to spend your hard-earned dollars on. But having the money already on hand means no loan payments spanning years into the future. It also means you’re just paying the exact amount you owe and there are no added interest charges or fees involved.
Don’t forget there’s no extra work on your part to get a loan or financing either. The savings money is right there waiting for you.
How To Get Started with Paying by Savings
This tops the list of easy too. Write a check and you’re done! Although in our non-check writing world (I’m looking at you, Millennials and beyond . . . ), it might be easier for some and *super hard* for others depending on if you have paper checks or not.
You could always get a cashier’s check issued from the bank if you don’t have checks on hand.
7. Making a Savings Plan to Pay for Foundation Repairs
The second best thing next to having the money right off the bat is saving up the money and then getting the foundation repairs. You have the benefit of again not paying any interest or extra fees. The legwork is certainly less than going through a refi or special loan process.
Things To Consider About a Savings Plan
Most foundation repairs are not emergencies. Your foundation problems have taken many years to form and most problems will likely wait around until you have money saved up to fix them. In other words, it is generally safe to live in a home that needs foundation work while you take the time to build your savings.
In our area of Central Texas that has slab-on-grade and pier and beam homes, it’s okay to wait until you are ready to handle your foundation problems. Many foundation repair companies use scare tactics to make you think that all foundation issues are urgent and dire. We don’t subscribe to that kind of marketing method.
How To Get Started With a Savings Plan to Pay for Foundation Repairs
The next step is knowing how much your foundation repairs might cost so that you know how much you need to save up. You will need to get a foundation inspection from a foundation repair contractor and they will get you a quote. You might want to get a second opinion or talk to more than one contractor.
Selecting a foundation repair contractor is an important step to contemplate too. We’ve got a couple of articles that might help you here:
Can My Homeowner’s Insurance Pay for Foundation Repair?
Good question. Ok, good question but kind of a complicated answer. There are some cases where an insurance policy will cover foundation repairs. BUT your typical policy only covers foundation repairs in very specific (and much less likely) instances. Think objects falling from the sky and damaging your foundation . . .
Homeowner’s insurance policies *sometimes* cover foundation repairs if they are directly caused by plumbing leaks. But most policies will not cover foundation repairs caused by the predominant source of foundation settlement and problems, which is expansive clay soils.
For more details on this whole other rabbit hole, check out this: “Is Foundation Repair Covered by my Homeowner’s Insurance Policy?”
How Much Should You Expect to Pay for Foundation Repairs?
For a slab foundation, we have some great range and estimation tools available to help you get an idea of how much foundation repair might cost. Even if you are not ready for a full foundation inspection right now, it’s nice to get some ballpark figures.
Anchor Foundation Repair has been serving Bryan, College Station, and surrounding Brazos Valley communities like Navasota and Madisonville since 1985. We want the homeowners we help to have 100% transparent pricing and cost information when you need it to feel good about your foundation repair plans.
This article is a great next step in understanding how much a potential foundation repair might cost so you can start thinking about a funding or savings plan. Check out, “What Is the Best Foundation Repair Method and How Much Does it Cost?”