Buying a home comes with many expenses, including regular maintenance costs. A commonly cited rule of thumb is to save between 1% and 4% of the home’s value for maintenance and repairs.
However, this number does not take into account all factors. This guide will help homeowners set realistic goals to avoid costly surprises in the future.
Estimates
Homeownership comes with many expenses, and a major one is maintenance. The cost of repairs can be daunting and unpredictable, especially for new homeowners who may not have the experience of handling these costs as a renter.
A common recommendation is to save between 1% and 4% of the initial purchase price of a home each year for maintenance. This rule of thumb can be a great starting point, but it’s important to take a closer look at the various factors that might affect these estimates.
For example, a home in a climate with heavy rainfall or a coastal location might require more frequent and expensive maintenance than a home in an average neighborhood. Also, older appliances and systems tend to wear out faster than their younger counterparts.
Another factor is the number of occupants and their lifestyles, which can impact maintenance needs. For instance, a large household with a lot of cooks in the kitchen will likely need more plumbing and electrical maintenance than a smaller house that only hosts occasional guests.
Budgeting
Home maintenance expenses are a reality of homeownership. However, it’s possible to reduce the amount of money you need to set aside by planning ahead and making smart choices about your home’s upkeep.
Generally, experts suggest setting aside 1% of the home’s purchase price to cover annual repair and maintenance costs. But this is a general rule of thumb, and it can vary by the exact cost and age of your house.
For example, if you own a newer home with modern appliances and systems, the costs may be lower than what would be expected for an older, less-well-maintained property. In addition, many of the smaller tasks you might want to tackle—such as replacing the furnace filter or cleaning out the eavestroughs—are inexpensive.
On the other hand, more costly jobs like installing a roof or replacing the water heater will need to be saved for in advance. Creating a savings plan for these expenses can help you avoid going into debt to cover them, and it can also make
the process of repairing or replacing your home is less stressful.
Contingency Planning
Home maintenance costs can be high, but a well-thought-out plan and savings can help minimize the financial impact.
It’s important to set aside enough money for basic home maintenance, like landscaping, painting and refinishing floors. This will ensure that these tasks are covered when the time comes, rather than having to scramble to find the funds.
Other tasks that can be included in this category are the yearly maintenance cost of appliances and systems, such as the heating and cooling system, electrical, plumbing and hot water heater. Keeping track of the age of these components and estimating when they’ll need to be replaced will help you budget for those expenses.
Lesh advises homeowners to keep an eye on their local weather conditions and climate, as homes in wet or humid areas may require more upkeep. She also suggests checking with home warranty companies to see if they cover certain items and, if not, what the expected costs are.
Savings
Many experts recommend having between 1% and 4% of your home’s value saved in savings to cover unexpected repairs and maintenance costs. But your specific situation can influence whether you should save more or less.
Having money set aside for expected expenses can make it easier to stay on top of routine maintenance and prevent costly surprises down the road. You can start by setting up a separate savings account and depositing a small amount each month or with each paycheck.
A general rule of thumb is to have 1 percent of your home’s value in savings, but this figure may be too low for some homeowners, especially those in older homes. It also depends on your location and climate. For example, homes in rainy areas or near water may experience more wear and tear. That’s why it’s best to do your research to determine how much you should save for your particular home.
You may consider a home warranty plan rather than trying to save towards the repair costs. This will allow you to have a peace of mind and not worry if you can afford the repair. How much are home warranty plans and which one is right for you? Look online for more information regarding home warranty and look for reputable companies.
