If you’re looking to buy a home, you probably know you’ll need to budget your mortgage payments. You’ll also need to cover homeowner’s expenses like property taxes, insurance, and routine maintenance. But there’s one expense that might really scare you off, and that’s understandable: home repairs.
The problem with home repairs is twofold. First of all, they can appear unexpectedly. Second, they can be difficult to budget for.
When you sign a mortgage, you will be told how much to pay each month to your loan manager. You will also receive a property tax bill from your city and a bill from your home insurance company telling you what your premium looks like. You can also determine which maintenance items you will need to tackle on an ongoing basis and determine what they will cost you. But it’s almost impossible to predict what you’ll spend on repairs each month, quarter, or year.
In fact, you may be hesitant to buy a home due to the risk of costly repairs. But is that a reason to avoid homeownership and continue to rent?
Expect the unexpected with homeownership
While home repairs can be unpredictable, there are steps you can take to manage them better. The first is simple: Expect them to happen.
You might be lucky and you won’t have to deal with too many repairs early on in homeownership, but eventually they will add up, especially as your home ages. So resigning yourself to paying for them might actually help reduce stress because you can include a repair item in your budget. Any month that you don’t spend money on repairs, that money can be used directly into savings so that you have a cushion for problems to do arise.
Second, have a healthy emergency fund before you buy a home. If you become a homeowner with enough money to cover at least three months of living expenses, there’s a good chance you can handle a surprise home repair that isn’t catastrophic.
At the same time, if you factor home repairs into your budget, you are unlikely to spend any money on them. all month. If you strive to put that money into savings during the months when problems don’t arise, you’ll be in a great position to regularly increase your emergency savings.
It’s good to keep renting
Homeownership is not for everyone. If you really can’t stand the thought of having to do expensive home repairs, you may decide that renting is a better choice for you.
As a tenant, you are only liable for the monthly rent payment. And while your rent may go up from year to year, if you get hit by an increase that isn’t right for you, you can still find new accommodation. On the other hand, you can’t abandon your home in the blink of an eye if repair bills come up.
While homeownership offers many benefits, such as the ability to increase equity in a property that may increase in value over time, it may not match your level of financial comfort. And if you’re the type who doesn’t cope with surprise bills, buying a home might not be the best option for you.