3 Reasons Homeowners Need a Larger Emergency Fund

Bulk up your savings if you plan to buy a home in the near term.

No matter your income level or housing situation, it's a good idea to have an emergency fund with enough money to cover at least three months of essential living expenses. But if you're buying a home, you may want to pad your savings account so it's able to cover more like six months' worth of bills.

Now, you might assume this advice is counterintuitive. After all, isn't owning a home supposed to lead to more financial stability? And in that case, why should you need extra savings? But while that may hold true in the long run, if you're buying a home, you should pad your emergency fund for these key reasons.

1. Repairs could pop up out of nowhere

When you own a home, every little thing that goes wrong with it is your financial responsibility. And some home repairs can be quite substantial.

If your roof needs to be replaced or your heating system goes kaput, it could take many thousands of dollars to address the issue at hand. In the absence of a larger emergency fund, you could end up getting stuck with a credit card balance that costs you a lot of money in interest.

2. Your property taxes could rise

Property taxes aren't set in stone. If the value of your home increases a lot from one year to the next, you could get hit with a larger property tax bill -- one your regular paycheck can't cover. That's why you need extra money in the bank, so you can handle that additional cost without resorting to debt.

3. It's harder to sell a home than it is to get a new rental

If you're renting a home and your financial situation takes a turn for the worse (such as if you're forced to get a new job that comes with a pay cut), then you may have the option to break your lease at no cost (or a minimal cost) and move to a less expensive home fairly quickly. But if you own a home, changing your housing situation isn't as simple.

It can take quite a bit of time to sell a home, even in situations where buyer demand is strong and you get an offer shortly after putting your property on the market. In fact, it's not unusual for a mortgage to take 60 days to close. Even if you find a buyer who wants to move quickly, doing so may not be an option. Having more money on hand in an emergency fund could help you ride out a scenario where you really need to get out of your housing situation but can't do so just yet.

It's generally not a bad idea to err on the side of having a little extra money in your emergency savings. But if you're a homeowner or are planning to buy in the near term, then it definitely pays to pad your savings as much as possible. Doing so could prevent a world of unfavorable consequences if your financial circumstances change for the worse. And at the very least, a boosted emergency fund could give you peace of mind as you sign up to tackle the many expenses that come with owning property.