Natural disasters can hit us any time without any warning. Normally, it is after a natural disaster that we come to know that our insurance policy does not cover all of the damages to our dwellings and possessions. But it should be noted here that disaster survivors get loans from all kinds of sources, some obvious and some unexpected. You should know the right sources from where you can get mortgages or borrow money at the lowest possible rates.
Let’s take a look at some of the major sources of borrowing money to pay for uninsured expenses after a disaster:
FHA 203(h) loan: In case your home is located in a federally designated disaster area and has been damaged badly that it needs to be reconstructed, then you can apply for a FHA 203 (h) loan. You can contact any FHA lender in order to get this loan. You won’t have to pay any down –payment. However, the loan should be within maximum FHA loan limits.
Take out a 401(k) loan: In most cases, people can borrow up to $50,000 or 50% of their vested balance, whichever is less in the form of a 401(k) loan. However, the borrower will have to repay the loan with interest within 5 years.
Get a loan from SBA: If you reside in a federally declared disaster area, then you can qualify for a disaster relief loan from the Small Business Administration (SBA). Such loans are available to renters as well as homeowners irrespective of the fact whether or not they own a business. Homeowners can borrow up to $200,000 at a very low interest rate to make repairs, and they can borrow an additional $40,000 to pay for personal property damage.
Home equity loan: In case you have a home equity line of credit (HELOC) with an available balance, then you can get money for your home repairs by borrowing from it. In general, there are no restrictions as to how borrowers will use their home equity lines of credit. So, the existing HELOC customers may continue to access their lines of credit to pay for repairs to a damaged home.
Take out a signature loan: This can also be an option to pay for the home repairs and reconstruction. However, you should note that in order to qualify for a personal loan, you should have good or excellent credit. These loans are also known as “signature loans” and many a times, banks may require a car or a home as collateral in order to give you this loan.
Take loan against cash value insurance policy: Many people don’t know about the cash value of their life insurance policies. Depending upon the policy, you will be able to take out the money and won’t be liable for paying it back. However, you should check out the rules which depend on your individual life insurance policy.
Take help of relatives: You may borrow money from your relatives provided they are comfortable enough to lend you money. Experts opine that if you borrow from your family members, you should put the repayment agreement in writing. This will help you avoid any kind of conflict later on.