81% of Homeowners Faced Unexpected Repairs Their First Year of Ownership
- Home repairs have a tendency to catch property owners off guard.
- It's important to boost your cash reserves before buying a home so sudden repairs don't drive you into debt.
Talk about an unpleasant surprise.
When you buy a home, it's not just your ongoing mortgage payments you have to worry about. You also have to do whatever it takes to keep your home functional. That means performing regular maintenance and addressing repairs as they pop up.
But if you're new to homeownership, you may be surprised at how quickly repairs start to rear their ugly head. In a recent report by Hippo, 81% of homeowners faced surprise repairs within a year of purchasing their home. And unless you're buying a new construction property, that's something you should anticipate, too.
Don’t buy a home without plenty of savings
As a general rule, it's important to maintain a solid emergency fund so you have cash at the ready to cover unplanned bills. But if you're buying a home, it's even more important to have a solid level of savings.
You never know when a home repair might sneak up on you, and while some repairs are minor in nature, others can be extremely costly. Without cash in the bank, you could end up with a pile of debt on your hands when your roof needs a fix or your heating system needs an overhaul.
How much money should you set aside for sudden home repairs? There's really no specific figure to target. When it comes to emergency savings, a good rule of thumb is to sock away enough money to cover three to six months of living costs. If you hit that target, there's a good chance you'll end up with enough money in the bank to cover a host of repairs.
However, you may want to open a separate savings account with money specifically earmarked for home repairs. At that point, the amount you save is really up to you. If you want more peace of mind, aim for $5,000 to $10,000, or whatever sum you think is reasonable. The key, either way, is to have some cash at the ready in case your home throws you a curveball.
How to pay for sudden home repairs when you don't have the cash
If you land in the unfortunate situation of having to fix your home at a time when your bank account is mostly empty, don't just rush to whip out a credit card and pay off that charge over time. If you have equity in your home, you may be able to borrow against it more affordably to cover your home repair.
If you don't have much equity in your home -- which may be the case if you recently purchased it -- you can look at taking out a personal loan instead. A personal loan lets you borrow money for any purpose. And you'll generally enjoy a much lower interest rate on a personal loan than you will on a credit card.
Home repairs can pop up out of nowhere. Even if you have a home inspection prior to closing on your mortgage that reveals no issues, something could go wrong just months down the line.
If you're going to buy a home, be sure to brace for that possibility. Also, do your best to amass some cash savings so you're in a position to pay for home repairs as they arise.
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