Along with the joy of homeownership comes the inevitable maintenance costs. Things are going to break, and you have to pay the bill when it happens. Some things are cheap to replace, and some things are shockingly expensive.
To prepare for the inevitable, it’s helpful to make a plan for your finances. Here are some steps you can take now to mitigate the stress and financial strain that can happen when unexpected home repairs happen.
If you don’t already have one in place, now is the time to establish an emergency fund. An old rule of thumb was to keep at least one percent of your home’s value saved in an emergency fund. Although that amount is still a good goal to work toward, home values have risen to the point where many people will need to slowly work their way up to saving that amount. Plan to have at least $2,000 available in your emergency fund, as that will cover the cost of most types of minor home repairs.
If your home has built up some equity already, you may be able to access these funds to help pay for expensive repairs. Tapping into your home equity probably isn’t a good Plan A to pay for unexpected home repairs, but it’s still a potential funding option. A home equity line of credit (commonly abbreviated as HELOC) and a fixed home equity loan each have their pros and cons, but both options make it possible to access your home’s equity. A HELOC allows you to pull (or draw) funds as you need them over a specific timeframe. This option can offer some peace of mind because once you have the loan, you can quickly access funds if you need them.
Similarly, a personal line of credit allows you to access funds as you need them up to your credit limit. The limit on a personal line of credit is typically lower than a HELOC because these loans don’t factor in your home equity. But again, it can be a nice back-up option to have in place to help you pay for emergency repairs or other ongoing expenses.
Performing regular maintenance on appliances, mechanical equipment, and the structure of your home can help prevent costly repairs. Regular maintenance will make your appliances last for longer and run more efficiently, which could help you save money on repairs and energy bills over time.
Did you know that your dishwasher and washing machine have a filter that you’re supposed to clean every couple of months? Did you know that you’re supposed to drain your hot water tank occasionally? And when was the last time you checked your furnace filter? Properly maintaining equipment can double its lifespan.
YouTube is a great resource for people who are a little more DIY-oriented. Just search for the type of repair that needs to be done and watch a few videos explaining how to do it. You’d be surprised at how do-able many home repairs are, even for a complete newbie. When you’re only paying for the parts and doing the labor yourself, the price tag for many home repairs will come down by a lot.
And don’t forget to tap into your network of family and friends if you need help. If you know someone who has experience with home repairs, they may be willing to help you for free.
Keep in mind that you should leave some projects and repairs to a professional. An easy rule of thumb is this: If doing the repair could result in bodily harm, it may be best to let an expert handle it. Repairs to high voltage electrical systems or appliances that use natural gas are good examples of projects you shouldn’t tackle unless you know exactly what you’re doing.
While owning a home can be stressful at times, it’s also a joyful experience. It feels good to have a space to call your own. A space to experience a new chapter in life. Relax. And make new memories.
Content created in partnership with our friends at Mortgage Center. Visit mortgagecenter.com/laketrust1 to start your home loan journey.
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