Buying a home is an exciting time. Instead of paying rent month-to-month, you are finally investing in your future. While a new home can be a great investment, it also comes with many costs, such as taxes, new purchases and home repairs. And oftentimes, these repairs come when you least expect it. Even when you’re sharing the costs with a spouse, maintenance needs can add up quickly. The last thing you want is to end up in debt — all because of your house! According to Porch, a home services site, in the past year, about 90 percent of homeowners paid for at least one major home repair.1 During this time, the average American spent approximately $5,000 on both repairs and improvements.1
While you may think purchasing a new house was the most expensive part, home repairs can amount to thousands of dollars throughout the years. Wear and tear is common, especially if you buy an older house. As an example, Home Advisor reports that the average roof can last for about two decades and can cost $7,000 or more to replace.2 A repair alone for your roof can cost you $2,500 at a minimum.2 However, you can plan for these "unexpected" repairs. With these four budgeting tips, you’ll be well on your way to managing these any home maintenance repairs that pop up with ease.
There’s nothing worse than having a major home repair come up, and not having enough funds to cover it. So, as soon as you can, set up an emergency fund to account for any repairs beyond simple fixes. While there’s no definite amount of money you should have in this account, $10,000 could be a good starting point. As time goes on, you can gradually add to this fund as well, providing you with some peace of mind as you adjust to your new life as a homeowner. Although it will be hard to not touch that money, you will be extremely grateful you didn’t once a major repair comes up.
2. Save, save, save.
In addition to your emergency fund, you’ll also want to have a consistent method of putting away money. One way you can do this is by putting at least one percent of your home’s purchase price every year into a savings account, which can double as your emergency fund. If your house is older and appears to need repairs quite often, you may even want to bump up this amount to three percent, just to be safe.
3. Consider square footage.
While the above method is a good way to ensure you’re putting enough savings aside, another way you can account for home repairs is by saving $1 for every square foot of your house each month. This money can not only go to home repairs, but also upgrades as many of our tastes change throughout the years. However, it’s important to note that this budgeting technique does not take into account labor and material costs, which is why it’s always a good idea to have an emergency fund as well while you work towards growing your savings account.
4. Look at a variety of factors.
A lot of factors can impact the number of repairs your new house will need. Examples include the type of house, its age, the overall condition, its location and even the weather where you’re living. For each of these, add an additional 10 percent to your annual budget to ensure nothing falls through the cracks as you’re planning ahead for your expenses. Compared to condos, townhouses and duplexes, single-family homes are bound to have more maintenance needs, simply because of their size. Additionally, homes that are 10- to 20-years old require a moderate amount of repairs, with those that are 20 years and older most likely needing the most maintenance due to wear and tear.
Home ownership is rewarding as well as expensive. That's why it's important to have a budget and a financial roadmap. Our process is sound and can help you plan and budget for all the joys that home ownership has to offer.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.