As a homeowner, the one thing you always want to avoid is a big fat repair bill and if you haven’t faced one yet, just wait. Some of the best-maintained homes also have stuff that wears out or breaks and this is when you have to face the storm. It is not easy to budget for these inevitable bills but there is a rule of thumb- always save between 1% to 4% of the value of your home every year for repairs and maintenance. If you do this, you can avoid the shock when the bill comes.
The Home Cost Will Depend on the Condition, Age, and Climate
There is a rule of thumb to spend a limited amount on the repairs and maintenance of your home but how much you actually spend depends on the age of the home, the condition, and the local climate. Say, you have a laminated shingle roof that can last 35 to 40 years but if you live in the harsh sun of Florida, it would survive less than 15 years. No matter the type of home you have, extreme weather conditions can wreak havoc. How well you maintain the house can also have an impact.
A lot of homeowners do not notice their window caulking which dries out and splits but they will only notice it when the water that seeps can cause a lot of damage. A minor repair of $12 or $20 could turn into a huge spend worth $15,000 to rebuild the wall below the window. All homeowners spend close to $1000 annually on home maintenance but this amount varies based on the home’s age, size, and other factors. Over the years, the percentage of a home’s value spent on maintenance has increased.
How Much to Set Aside?
There are a lot of people who prefer to hire others but they will spend more than they would if they do it themselves. Most homeowners do not have the skills and expertise for DIY home repair and they need to hire professionals for the job. Even if you plan for repairs and maintenance, there will be emergency repairs and you will have to handle them right away. This is why it is recommended to set aside about 5% of the income for home maintenance and have a separate fund for emergency repairs or replacement.
Another option is to save based on the remaining lifespan of the components of your home. This includes the systems and appliances. Alternatively, you could consider home warranty plans and ensure that the repairs and maintenance are handled by the company. You will have to pay a monthly or annual fee and when the system or appliance breaks down, the company will send a technician and you will only pay the service fee. You can also consider hiring a home inspector for the home maintenance inspection and since it is done before the home purchase, the inspector will be able to estimate when the home systems will require a replacement.
Other Ways to Prepare for Maintenance and Repair
Another alternative way to prepare for home repair and maintenance is to set up a home equity line of credit which you can tap into in case the repair bills are higher than what you have saved. The line of credit will be less expensive as compared to many other financing options like credit cards. However, do remember to make the payment because if you don’t, then the lender could foreclose on the home.
To conclude, always be aware of the fact that the stuff in your home is not going to last forever and it will need repair and maintenance over the years. The sooner you start saving for it, the better it is for you. Even if it is a small amount, it can go a long way. You can either choose to set aside a certain amount every year and continue to add to the fund or you could buy a home warranty plan which will help save a lot of money in the long term.
Even a home inspection is a smart idea if you are planning to buy a new home. This will give you a basic idea about the expenses you might have to incur in the future. You only buy a home once and you want to ensure that everything in your home works perfectly. Hence, start setting aside at least 2% to 5% of the value of your home in the home repair and maintenance fund. Even if there is an emergency, you can tap the fund and handle the expenses. The cost of repair and maintenance is only going to rise in the coming years and the sooner you start saving for it, the better it is.