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Nope, that figure is not an exaggeration.
Key points
- When you buy a home, lots of things can potentially go wrong.
- Building up an emergency fund before you buy a house can make home repairs easier to pay for.
- A home equity loan is also an option some homeowners can use to cover repair costs.
When my husband and I purchased our home 12 years ago, we figured we’d be off the hook for a while with regard to home repairs. See, the property we bought was new construction — so new we watched it get built from the ground up. And between the newness factor and the various warranties that came with our home, we figured we wouldn’t encounter any costly repairs for a good number of years.
But once our home neared its 10th birthday, things started to take a turn for the worse. In fact, over the past three years alone, my husband and I have shelled out a good $20,000 between having to replace not one, but two air conditioning systems, part of our deck, and a water heater. Thankfully, we took steps to prepare for repairs, and as a result, we have no debt as a result of that work.
Boost your emergency fund before buying a home
When my husband and I sat down to crunch numbers and figure out how much house we could afford, we made a rule — to always have enough money in our savings account to cover a year’s worth of living costs, plus extra money to pay for home repairs.
See, we know from having owned a previous home that when repairs pop up, they can sometimes cost $500, or they can sometimes cost $5,000. So it’s really difficult to budget money every month for home repairs when their costs can vary widely.
That’s why we made the decision to retain a lot of cash in our savings before moving forward with our home purchase. We could’ve used some of our cash to make a larger down payment on our home, which would have resulted in lower mortgage payments. But instead, we specifically kept more of our cash for those “just in case” moments. And it’s a decision I’m grateful for.
Now to be clear, we’ve also made a point to add to our emergency fund through the years. In fact, when we first bought our home, we had a year’s worth …….