The first time your roof springs a leak or your AC fails in the dead of summer, you'll be longing for the carefree days of renting. However, repairing your home doesn't need to be a stressful experience. When you’re financially prepared for major home repairs and have contractors you can count on, maintaining your home becomes a matter of routine.
Here's what you need to know about planning and paying for home repairs.
How to Save for Routine Home Repairs
When you're a homeowner, home repairs are a fact of life. Starting a home repair fund ensures that you can afford the routine maintenance required to keep a home in good condition. Generation X Finance recommends putting at least 10 percent of your mortgage payment into a savings account each month and earmarking it for home repairs. Use a high-yield savings account to grow the fund while keeping it easy to access.
However, 10 percent might not be enough if your home is more than a few years old. Buyers of new homes have time to build up their rainy day repair fund, but older homes need major repairs sooner.
How to Pay for Emergency Home Repairs
Sometimes a home repair takes you by surprise. Putting off a necessary repair is an expensive mistake. If you don't have enough money to cover it, consider these options to finance any emergency repairs you may encounter.
● File a homeowner's insurance claim: Homeowner's insurance covers certain repairs. Specific coverage details vary by policy, but in general, homeowners insurance doesn't cover flooding, preventable damage, or wear and tear.
● Apply for a personal loan: A personal loan offers relatively fast access to cash without the high-interest rates of a credit card.
● Draw from home equity: Applying for a cash-out refinance or a home equity line of credit gives homeowners access to larger sums of cash, although processing times are slower than personal loans.
● Use a credit card: Credit cards are helpful in a pinch, but they are best used for smaller sums. If you put a major repair on a credit card and can't pay it off quickly, that home repair will cost you a lot more.
How to Finance Home Improvements
Maintenance and repairs aren't the only reasons to spend money on your home. Home improvement is key to maintaining your home's resale value. However, most people don't have thousands of dollars on hand to pay for a new deck or a major kitchen renovation (the cost of kitchen remodeling in Braintree ranges from $20,000 to $42,675.
Consumer Reports recommends that homeowners with more than 25 percent home equity use a HELOC or home equity loan to take advantage of low-interest rates. If you're confident you can pay off the balance within the introductory period, a 0 percent interest credit card is a cost-effective choice. No matter what type of financing you choose, save up first.
How to Hire High-Quality Contractors
Hiring a contractor can feel like a shot in the dark. As a layperson, it's not easy to distinguish what separates a trustworthy contractor from a shady one. Making the wrong choice could cost you big: Disreputable contractors have been known to disappear with deposits, surprise homeowners with inflated bills, or complete unpermitted work that won't pass inspection.
Whether it’s roofing, foundation needs (the average foundation repair costs $5,838), windows, or any other major job, you need to find a quality contractor. Ask for recommendations from friends and neighbors, get your contract in writing, and always check that your contractor is licensed and insured. Remember: The best contractor isn't the one with the lowest price, but the one with the fairest practices and best quality of workmanship.
No one likes a $10,000 bill staring them in the face. If you're not prepared to pay, that repair bill could lead to much larger financial problems like missed mortgage payments or debt you can't get out of. By following this advice and saving up for home repairs, you can rest easy knowing your home is covered no matter what happens.
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Guest Blogger Julian Lane