On top of paying for your mortgage, property taxes, home insurance and so on, have you ever thought about saving for home maintenance repairs? Owning a home comes with unexpected costs, some of them are minor like replacing a leaking faucet, and some are major like a new roof. As things pop up, they will need to be addressed.
Maintenance expenses can be broken down into two categories: one being annual maintenance, like new furnace filters, replacing batteries in the smoke detectors, or cleaning the eavestroughs. These are inexpensive projects. The other category is long-term maintenance, and these are typically costly updates. Most homeowners will need to budget for this type of expense, so they aren’t caught off guard when they come up. This type of maintenance includes things like a new furnace, hot water tank, roof, siding, fencing and other major repairs fall into this category.
So, How Much Should You Save?
There is an unofficial rule of 1% of the purchase price of the home. Meaning, if you paid $500,000 that would mean saving $5,000 per year. Depending on the age, location, condition of the home, square footage the 1% rule could either be just right or on the low side. If you can afford it, I would recommend saving 3%-5% annually so you have a comfortable cushion when repairs come up.
If you are unsure of the status of your home condition and the expected life of the furnace, AC, hot water tank, roof, siding etc, it would be worthwhile to seek the advice of either a professional in each area or having a home inspection done. If you had a home inspection completed at the time of purchase, they would have provided you with a fulsome update of where your home stands and pending updates to keep in mind.
Budgeting for these things may seem like added expense, but saving over time will pay out when an issue needs to be addressed quickly.
If you find yourself in a situation where you either didn’t save or didn’t save enough and you are needing financial help in paying for home maintenance, please reach out as there could be financial options available by using the equity in your home.