How to Finance a Home Replacement
- 1). File an insurance claim with your insurance company. Many mortgages obligate the homeowner to pay for homeowner's insurance every month with the mortgage payment, although it differs depending on the insurance policy. The mortgage company holds the payment in escrow and sends it to the insurance company. You may also pay the insurance policy premium directly either quarterly or monthly. Your insurance company will provide a detailed form for you to fill out to disclose why you need a home replacement. A claims adjuster will also visit the property to determine the necessity of the replacement and to provide an estimate for how much the construction costs will be.
- 2). Contact the lender owning your mortgage (if you have one) informing them of the destruction of your original house. You may be required to refinance your existing mortgage to finance the new home. Lenders will typically not provide loans for reconstruction without putting in an additional application for a construction loan. Construction loans (which differ from mortgages) provide specifically for the construction of the house, and are tightly time-limited and more difficult to get approval for. The lender will require that you submit a detailed budget and construction plan if you apply for a construction loan.
- 3). Contact your state department of emergency management if your home was destroyed in a mass disaster such as a tornado, hurricane, forest fire or flood. If the Federal Emergency Management Agency worked on mitigating the damage of the disaster, you may also be eligible for financial assistance for replacing your home.
- 4). Utilize any funds provided by insurance companies, governments and lenders to finance your home replacement. In most cases, companies that provide funds for such replacements will check to ensure that you spend the money on a home replacement and not on other goods. Follow the terms of your agreements while replacing your home to avoid legal difficulties.