Homeowners How-To Guide: Paying for Your Foundation Repair

April 29, 2021

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If you’re wondering how to pay for foundation repair, the good news is that there may be more options available to you than you realize. It’s also vital that homeowners find out this information as soon as they know their home needs foundation repair, as foundation damage only gets more extensive and costlier the longer it’s ignored!

Home improvement loans are an excellent way to pay for foundation repair costs. In some cases, homeowners insurance might also cover repair costs, or you might be eligible for tax deductions for rental properties.

A banker or loan representative can help you decide how to pay for foundation repair, and your insurance agent is the best source of information when it comes to what’s covered under your policy. However, you might note some added information about foundation repair costs and how to meet this expense, as well as why it’s vital you pay for such repairs when needed.

foundation repair tools

Also, remember to check with your financial advisor before claiming any deductions on your taxes, so you avoid interest and penalties on improper deductions sometime down the road! You can also talk to a foundation repair contractor near you about repair costs, as he or she might know how other homeowners in the area paid for their repairs and might even offer financing as well. In the meantime, check out some added information on how to pay for foundation repair.

Is Foundation Repair Covered By Homeowners Insurance?

While a home’s foundation is considered a vital part of the home and therefore falls under the same coverage as the rest of the structure, note that there are repair costs that your insurance company “accepts” and others that it “rejects.” Consider what this means and, again, discuss your options with your insurance agent before assuming that foundation repairs are, or are not, covered by your policy.

Understanding flood insurance and foundation damage

Homes are not typically offered flood insurance through a standard policy; a homeowner is usually required to purchase separate flood insurance for any part of the home, including its foundation, to be covered against damages caused by outside flooding.

However, damage caused by indoor flooding, such as from a burst pipe or water heater, might be covered by your standard policy. Also, damage caused by vandalism is often covered, including flooding. As an example, if someone were to break a basement window and allow rainwater or snow to get into the home’s basement so that it then damages the foundation, this might be covered by your insurance policy.

Foundation damage due to poor drainage

french drain for drainage solution

Insurance companies will almost always reject claims for damage caused by a homeowner’s actions and especially their negligence. This can include poor-quality, DIY repairs that allow foundation damage to get worse over time.

Negligence might also include failing to ensure your property is graded or sloped away from the foundation, to allow excess moisture to drain away from the house. Regular foundation inspections can tell you if there is excess moisture collecting around the foundation and if the property needs better grading.

Causes of damage covered by homeowner’s insurance

Fire damage is typically covered by a homeowner’s insurance policy, as are lightning strikes, damage caused by vehicles, explosions, and windstorms. While these occurrences are rare and not likely the cause of your home’s foundation damage, it’s helpful to know what incidents are probably covered by your policy, so don’t assume that you’re responsible for all foundation repair costs.

Can You Deduct Foundation Repair on Taxes?

In most cases, upgrades to a home are tax-deductible while repairs are not. The reasoning behind this is that many upgrades, such as adding a new bathroom or renovating an outdated space, might increase home values and, in turn, your tax bill. Home repairs rarely increase home values so they’re rarely tax-deductible.

tools for foundation repair

There are some exceptions to this rule; one is if you use a portion of your home exclusively for your business and deduct part of your rent or mortgage payment as a business expense. However, note that you would only be able to deduct that same portion of your foundation repairs; if you use just 10% of your home for your business exclusively, you would only be able to deduct 10% of those foundation repair costs.

This principle is also true if you rent a portion of your home and claim that rent as income. As with any other rental property, certain repairs would then be tax-deductible. If you do rent out your home, talk to an accountant or tax preparer about deducting your foundation repair costs and how much of those costs you can claim against your taxes.

Home Repair Loan Options

Your bank might offer a few different loans that you can use for your foundation repair costs. Knowing your various loan options ensures you don’t overlook any chance of getting the funds you need for repairs to your home’s foundation!

Cash-out refinancing

Cash-out refinancing refers to obtaining a mortgage that’s higher than the amount you owe on your home currently. You then pay off the current mortgage and use the excess funds for other expenses, such as foundation repairs.

As an example, if you owe $100,000 on your mortgage, you would get a new mortgage for $105,000. Using that money, you would pay off your current mortgage and use the remaining $5000 for foundation repair costs. Cash-out refinancing allows you to pay those repair costs over time, as part of your new mortgage. Also, if that new mortgage has a lower interest rate, you can even save money on your home loan over the years.

cash for foundation repairs

Home equity loans

Home equity loans allow you to borrow money against the equity you’ve built up over the years. If you still have a mortgage on your home, you would then be paying two loans; the mortgage itself, and your new home equity loan.

A home equity loan also means that you use your home as collateral for that loan, and you need to have built up equity. In some cases, a home equity loan is tax-deductible, so talk with an accountant before applying for such a loan.

Home equity line of credit

A home equity line of credit also uses any equity you’ve built up over the years; however, rather than a one-time loan, this arrangement works like a credit card. You are allowed to borrow a certain maximum amount set by your lender as often as needed, and as you pay back that amount.

As an example, if you’re eligible for a $5000 home equity line of credit, you might borrow $2000 for your foundation repair costs and another $2000 for other reasons. You would still have $1000 left to borrow as you need it, and can borrow whatever sum you pay back as well, as long as you don’t exceed that $5000 limit.

Personal loans

A personal loan might not require collateral and is for those with an excellent credit rating and income-to-debt ratio, meaning that they earn enough money to easily pay back the loan and other debts they’re carrying currently. However, personal loans often have higher interest rates than other loans, since they come with a greater risk to the lender.

Investing in Foundation Repairs

working on foundation repairs

Despite any difficulties you might face trying to pay for foundation repair, the cost is well worth it! Foundations keep a home level and even; once a foundation weakens, the home will typically start to shift and settle, so that it pulls on interior and exterior surfaces. As this happens, cracks form along the interior and exterior walls and ceiling tiles, as well as a home’s roof.

Inside the home, doors and windows might stick or doors might hang open and refuse to stay closed! Floors can also buckle or floor tiles pull away from the subflooring under them. Baseboards and crown molding can also pull away from the walls and drywall nails “pop” or get pulled out of position.

Plumbing pipes might also get pulled away from connectors or out of their correct angle, leading to leaks or clogs. In extreme cases, ceiling tiles and wall sections can collapse or basement walls bow outward and also risk collapsing.

Those cracks inside and outside the home let in moisture, increasing the risk of water damage, wood rot, and mold. Pests also make their way into the home through those cracks; termite and carpenter ant infestations are very damaging and can mean even more costly repairs!

water damage from foundation issues

Fixing a home’s foundation at the first sign of damage is the best choice for avoiding these risks and ensuring your home is always in good condition. Waterproofing and crawlspace encapsulation also helps protect that foundation from future damage while ensuring your home is always clean and dry and safe for occupation.

At Better Foundation Repair San Diego, we hope this information helped you determine how to pay for foundation repair. If you need foundation repair for your home or business or aren’t sure if cracks around your home’s walls indicate foundation damage, give us a call! Our foundation repair contractors in San Diego offer expert services and timely response especially for emergency repairs, and we stand behind all our work with a full guarantee you can trust. To find out more, give us a call today.

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