While the hassles of home repairs and upgrades are inevitable, you can avoid having them become a budget crisis.

While owning a home is often considered a good long-term investment, in the short term many homeowners find themselves facing unexpected expenses. According to a recent Home Advisor report, 85% of homeowners end up fixing at least one issue they were unaware of during the buying process. And over the course of owning a home, buyers spend an average of $7,080 fixing previous owners’ mistakes. Does this mean buying a home isn’t a good idea? Absolutely not! But it does mean you should be prepared for the expenses that come with homeownership.

Budget with unexpected expenses in mind

When buying a house, it’s very clear what your expenses for a home loan, taxes and insurance will be. However, unexpected repairs and upgrades present two unknowns: when they’ll be needed and how much they’ll cost. To avoid a financial crunch, set aside money specifically for home repairs.

How much to set aside

A common guideline is to budget 1% of the home’s purchase price for maintenance and unexpected repairs. For example, with a $300,000 home you should set aside at least $3,000. In some cases you may want to save up to 4%. Larger and older homes will require more upkeep and repairs than smaller, newer homes.

Give yourself peace of mind

Every home, new and old alike, will require maintenance at some point. Plumbing and electrical problems are common, as well as leaks and HVAC glitches. While you can’t avoid the hassle of such problems, preparing for them financially can bring you peace of mind. When a repair or upgrade is needed, you avoid a potential financial budget crisis when you have specific savings for these purposes.

Another advantage of setting money aside in a savings account for home repairs is that you can address problems early on. Fixing a small problem before it becomes a bigger one will save you money in the long run. 

Consumers helps more than 2,000 members finance land, first and second homes, and home improvement projects each year. We’d love to help you with a mortgage or home equity line of credit; contact us online or call us at 800-991-2221.