You ran the numbers on buying versus renting, the mortgage payments on different home prices and the costs of utilities, but have you budgeted for big-ticket and seasonal home maintenance costs? Give yourself peace of mind by preparing for the costs of homeownership upfront.
Set Up Automatic Monthly Deposits Into Savings
Experts say you should plan to save a yearly amount between 1 and 4 percent of your home’s assessed value. So if your home is assessed at $200,000, aim to save between $2,000 and $8,000 per year. Though it seems like a wide gap in savings, the percentage you choose to put back is dependent on your home’s age, condition and the costs of labor in your area.
Build a 5-Year Plan
Whether it’s your forever home or a starter home, sit down and brainstorm the items in your home you expect to need some attention over the next five years. This is where home inspections can come in to play. If your home inspector said your air conditioner was 10 years old, your windows are showing signs of inefficiency, etc. you know that you will eventually need to replace them.
The average cost of a new air conditioning unit is $5,257, according to HomeAdvisor. By spreading your savings over the span of five years, saving $88 per month isn’t quite as intimidating. Itemize your 5-year repairs, how much you need to save and add in a little extra cushioning for unexpected maintenance projects.
Prioritize Your Savings
In short, repairs and maintenance trump renovations. While you’d really love to add a kitchen backsplash or do a minor bathroom remodel, you need to make sure the things that make your home comfortable and energy efficient are taken care of first and foremost. Don’t neglect regular home maintenance projects to pave the way for aesthetic features.
Expand Your DIY Capabilities
As a first-time homeowner, you may feel the need to make a maintenance call for even minor home issues. On the other hand, today's biggest group of homebuyers, Millennials, also have a high interest in learning how to do home repairs and improvements on their own. Through YouTube tutorials or homeownership blogs, many home repairs (and troubleshooting) can be done on your own; just know your limits. Certain home improvements or home repairs need the attention of an expert.
If your home is in need of major renovations or repairs or you’re planning to purchase a fixer-upper, download our free Rehab & Construction Guide for loan options that allow you to roll the costs of your improvements into your mortgage.