In a NutshellReplacing your roof will likely increase your home value, but you’ll typically spend more on the project than you’ll make up for in added value. However, you’ll want to keep an eye on your roof’s condition to prevent leaks that can cause costly damage.
Your roof is one of the most critical components of your house. If it’s wearing out, you’ll need to replace it.
If you find yourself with an aging roof, you’re not alone. Each year over the next decade, an average of 2.3 million single-family homes in the U.S. will need their roofs replaced, according to the federal government.
In this article, we’ll go over whether replacing your roof is a good return on investment, the costs involved in the project and how often you should replace your roof.
- Will a new roof increase home value?
- Costs to install a roof
- How often should you put a new roof on a house?
- How to finance a roof replacement
- What’s next: Is a new roof a good investment?
Will a new roof increase home value?
A new roof will usually increase the value of your home. A better question, however, is whether it’s a good investment.
This requires you to measure the increase in home value against the amount you’ll spend to complete the project. The amount of increased value and the return on investment will depend on the type of roof you’re putting on your home.
Asphalt roof replacement
Replacing your roof with new asphalt shingles will increase your home’s value by about $18,780, according to a 2022 cost vs. value report from Remodeling. This assumes you have a rectangular hip roof with two regular-size skylights and a vented ridge.
In this case, your new asphalt shingle roof represents a 59.6% return on investment, meaning the amount of increased home value would be that percentage of the cost of the project.
Metal roof replacement
A new metal roof will increase your home value by about $28,196, according to the Remodeling report. While this is a larger increase than the asphalt roof replacement, you’ll also pay a lot more. That leaves you with an estimated return on investment of 54.8%, according to the report.
These estimates assume you need 3,000-square-feet of standing seam metal roofing on a rectangular hip roof with two average-size skylights and a vented ridge.
Costs to install a roof
The cost of your roof replacement also depends on the type of materials used, as well as the size and complexity of the roof. The below estimates are based on a 3,000 square-foot hip roof with two skylights. They can give you a sense of what your roof could cost.
Asphalt roof replacement
Replacing a roof with asphalt shingles will cost about $31,535, according to the Cost vs. Value Report. This includes the cost of putting in new underlayment, drip edging and flashing, as well as installing new fiberglass asphalt shingles that have a minimum 25-year warranty.
Most of the cost of an asphalt roof replacement comes from labor, according to HomeAdvisor, and the project takes about a week.
Metal roof replacement
Replacing a metal roof is a lot pricier, setting you back about $51,436, according to the Cost vs. Value Report. This includes putting in an ice barrier and premium underlayment before installing prefinished, standing seam metal roofing along with its accessories — like gable trim and flashing.
How often should you put a new roof on a house?
How often your roof will need to be replaced depends on the type of material it’s built from, as well as where your home is located. An asphalt shingle roof can be expected to last between 15 and 30 years, according to HomeAdvisor, with homes in warmer climates needing a replacement on the shorter end of that spectrum.
Metal roofs are more durable and can last as long as 50 years or more, according to the Metal Roofing Alliance trade group. Installing a metal roof generally only takes a few days.
How to finance a roof replacement
Because replacing a roof is so costly, you may not have the cash on hand to fully pay for the project. Fortunately, you may have several financing options to get the job done.
HELOC or home equity loan
Your home equity is the difference between how much you owe on your mortgage and what your home is worth. If you’ve built up enough equity — through a combination of your monthly payments and home appreciation — you may be able to borrow against this value to fund your roof replacement.
With a home equity loan, you borrow a lump sum that is paid back in monthly payments at a fixed rate. It’s often called a “second mortgage.” A home equity line of credit, or HELOC, works more like a credit card. You’re given a set limit and you can draw from your credit line multiple times up to that limit.
During your draw period, you often only need to pay the interest. When this period ends, you’ll pay back the amount you borrowed plus interest, typically at a variable rate.
A personal loan is usually an unsecured installment loan that you repay with fixed monthly payments. Because it is unsecured, you don’t risk losing your home or other property to foreclosure if you fail to make your payments.
You may also need to meet minimum credit and income requirements to qualify for a loan. Some lenders market personal loans as “home improvement loans” for projects such as replacing a roof.
Title I Home Improvement Loan
If you don’t have much home equity, a Title I Home Improvement Loan insured by the Federal Housing Administration may be an option. You may be able to borrow up to $25,000 for projects that make your home more livable and useful. You’ll generally have up to 20 years and 32 days to pay back the money you borrow.
Refinancing your current mortgage may also be a way to pay for home improvements like replacing your roof. With a cash-out refinance, you take out a new loan for a higher amount than you currently owe on your mortgage. The new loan pays off and replaces your existing mortgage, with the difference in the two balances coming to you as cash.
You may also choose to refinance your mortgage through the FHA Limited 203(k) program. This allows you to borrow up to $35,000 for home improvements.
Depending on your credit limit, you may be able to pay for a roof replacement with a credit card. But beware: Interest rates on credit cards can be extremely high, meaning you could pay a lot more in interest than you would with a different type of loan.
You may be able to find a 0% APR introductory rate credit card offer that could be a good option if you feel confident you can pay off the balance in a relatively short period of time.
These offers allow you to pay no interest for an introductory period. At the end of this period, however, the interest rate will jump significantly and you could owe back interest.
- Contractor financing: Your roofing contractor may offer you a payment plan. Contractors generally work with a certain lender, so be sure to inquire about which company this is before you agree to the terms.
- 401(k) loan: If you take part in an employer-sponsored retirement plan, you may be able to borrow from this savings to pay for your roof replacement. These loans generally have low interest rates and no minimum credit score requirements, but you’ll miss out on investment gains while your loan is outstanding. You also may need to repay the loan right away if you leave your job.
- State and local programs: Some state or local governments offer grant or loan programs to help low-income families afford home improvements.
What’s next: Is a new roof a good investment?
Whether a new roof is a good investment depends entirely on your individual circumstances. You likely won’t recoup the amount of money you spend on replacing your roof through increased home value.
If your roof is not in need of replacement, there’s little incentive to take on the project. But make sure you stay ahead of potential problems with your roofing system. A worn-out roof can allow water to seep into your home, causing costly damage. In that case, investing in a new roof can save you money down the line.
© 2022 Zonda Media, a Delaware Corporation. Complete data from the Remodeling 2022 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.