Prepared to Protect Your Investment: Tips for Covering the Cost of Home RepairsYoung homeowners are sometimes surprised and dismayed to learn that there’s no maintenance man to call when the roof
How Much Money Do You Need For Home Repairs And Maintenance
Dated: November 29 2018
Prepared to Protect Your Investment: Tips for Covering the Cost of Home Repairs
Young homeowners are sometimes surprised and dismayed to learn that there’s no maintenance man to call when the roof leaks or the dishwasher backs up. You’re on your own, and it can cost a lot of money. When you buy a house, you need to factor in repair costs and set money aside for them. It just so happens that some of the most common home repairs are also among the most expensive, such as roof repairs, window replacement, and water heater and HVAC maintenance.
A new roof runs somewhere between $4,000 and $10,000, based on the size of the house; replacement windows can cost as much as $500 each; and the average cost of a new furnace is nearly $4,000. Clearly, home ownership isn’t for the faint of heart — or the unprepared.
A home repair emergency fund should be cash you can get your hands on immediately when the need arises, so this isn’t money you’d tie up in a long-term savings portfolio. In general, money set aside in a simple savings account at your bank will suffice. According to a leading national financial adviser, a cash reserve emergency fund should be about 3 percent of the value of your home. Of course, a home repair emergency fund is only as good as the money you put into it, so make sure you’re contributing to it on a monthly basis.
Finding the Right Contractor
Unless you’re a handy homeowner and unafraid to take on big home repairs, you’re probably going to need a contractor. However, do your homework before entering into a financial agreement with someone. Ask friends and acquaintances for references, but remember that a contractor who did a great job for your sister-in-law won’t necessarily be the right person for your repair. Check a contractor’s licenses/certifications, and make sure there’s no history of complaints or litigation (online reviews can be helpful but make sure they’re legitimate).
Understand What You’re Dealing With
Getting the right contractor depends on your understanding of the problem and what it will take to repair it. For example, the better you understand how your HVAC system operates, the easier it will be to find someone who’s qualified to make repairs at a fair price. Spend some time researching online before you begin interviewing contractors, and check your warranty and homeowners insurance so you can put together a budget. Always monitor a contractor’s work at each stage to ensure they’re doing what they contracted for and that you’re getting quality work.
Realistically, not everyone is in a position to save 3 percent of their home value. Sometimes, any money you’ve saved must be used to address an unforeseen situation, leaving you with little or nothing in your “rainy day” fund. Homeowners facing a major home repair sometimes take out a home equity line of credit, which allows you to borrow against the value of your home.
There are also government loan programs (through FHA and Department of Housing and Urban Development, for example) that let you refinance your property and add money to the loan for home repairs. Credit cards and personal loans are also options, but pay close attention to your interest rate before deciding to follow this route.
If you’re in the market for a new home, assume that your new investment will come with repair costs at some point. Enter into it prepared to set aside enough money to deal with home repairs so you’re not stuck having to take on debt to finance a major repair project.
Image courtesy of Pixabay
Bret Engle | DiyGuys.net
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