The Realities Of Homeownership: Dealing With Unexpected Repairs

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Your first year of homeownership can be chock-full of surprises. Who knew that you would need so much furniture to fill all your rooms, or how quickly your furniture collects dust? But perhaps the biggest shock for new homeowners comes in the shape of repairs. 

Giving up a rental lease for a mortgage means you no longer have a landlord who takes care of maintenance and renovations.

That responsibility falls squarely on your shoulders now, along with the cost of upkeep and repairs. 

Extra household expenses can be hard to handle at any time, but they’re especially challenging in your first year at a new home.

Here’s what you can do to soften that financial blow now and many years down the line.

Follow The 1 Percent Saving Rule

Saving a little bit of money each month for repairs is important for homeowners.

Follow The 1 Percent Saving Rule

Even if you don’t need to make repairs one month, these savings roll over, accumulating until you have a bigger pot of funds to deal with bigger issues.

But how much money should you save each month? According to the 1 percent rule, you should sock away 1/12 of your home’s value every month. 

Let’s backup and explain what the 1 percent rule is. It’s simple — you just save the equivalent of 1% of your home’s sale price.

So, if you paid $655,507 for your home, you should aim to save roughly $6,555 a year or $446 a month.

Automate these savings at the start of your month, so you’re less likely to spend some (or all) of this money on other things.

It may sound like a lot, but this goal is set so high to help you achieve a variety of goals at home — from calling for an HVAC technician about your broken furnace to financing a cosmetic upgrade to your living room.

Use A Line Of Credit To Fill the Gap

Let’s face it — saving 1% of your home’s value is a tall order, especially when you’re first getting used to your bills as a homeowner. Your savings might fall short of this goal for a while.

Unfortunately, unexpected expenses can happen at the worst time, like when you’re first establishing your emergency fund.

If you’re shy of what you need, consider opening a line of credit online. Online lines of credit are convenient financial tools for the average homeowner, as you can’t always delay urgent repairs.

When your safety is on the line, you can dip into your credit to cover essential repairs without hesitation.

To apply, find out what you need to qualify and get your documents together in advance. Being prepared can speed up the whole process.

You can fill out a virtual application any time you need help, even if you notice a massive leak in your basement in the middle of the night.

Once approved, you can draw against your limit as often as you need, as long as you have credit available.

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Make sure to pay off your balance as fast as you can, if not in one lump sum. Bringing your balance to zero releases your credit again, so you have a safety net for the next emergency.

What About A HELOC

What About A HELOC?

On the subject of credit, you might be wondering about a HELOC. A Home Equity Line of Credit is another financial tool available to some homeowners.

It works the same way as your average online line of credit, but it usually comes with a higher limit and fewer fees.

Unfortunately for new homeowners, the limit is tied to the equity in your home. Equity is what you actually own — meaning the amount of your mortgage you have paid.

If this is your first year of owning a home, you’ve made fewer than 12 mortgage payments. That’s not enough equity to unlock the average HELOC.

Try Your Hand At DIY Repairs

One of the unsung joys of being a homeowner is learning how to run a household and take on repairs with your own two hands.

With a little bit of research and a lot of determination, you can grow your skills as a repair person, taking on a variety of small tasks around the house. 

Learning to roll up your sleeves and repair things on your own can promise big savings, if you’re shrewd with your work.

Understand your limits — you don’t want to attempt a DIY repair that is beyond your abilities — or you could make a costly mistake that makes matters worse.

You also don’t want to take on electrical or plumbing repairs that could involve safety risks to unlicensed and unexperienced individuals. 

Instead, stick to simple tasks like the ones shared here on This Old House. Slowly build up to bigger projects as you gain more experience, and don’t be afraid to enlist friends or family who are handy.

The Takeaway

Repairs and everyday maintenance may come as a surprise when you’re first getting used to your new home. But you’ll get used to your house’s quirks soon enough. 

Keep a HELOC in mind for bigger renovations after you’ve stayed in your place for several years.

Until then, start budgeting to set aside 1% of your home’s value and keep an online line of credit on standby for unexpected repairs.

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