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How to budget realistically for home repairs – Portland, Oregon

Portland, Oregon 2022-08-06 18:02:14 –

(Nerd Wallet) – If you’re a homeowner and haven’t faced a major repair bill yet, wait.

budgeting These inevitable bills aren’t always easy. One oft-quoted rule of thumb is to save 1-4% of the value of your home each year for maintenance and repairs.

Certified financial counselor Kate Mielitz recently purchased a home in Olympia, Washington, according to Realtor.com. Even saving her 1%, or $5,400, would be a burden for many owners, said Miritz, who advises low- to middle-income customers. A 4% savings means a savings of $21,600 per year.

“That number makes me want to cry,” says Mielitz.

House costs vary by age, condition and climate

However, rules of thumb are of limited value. how much to spend It often depends on factors such as the age of the home, the materials used, and local climate patterns, says John Wessling, president of the American Society of Home Inspectors.

For example, in St. Louis, where Wesling lives, a laminated roof can last 35 to 40 years. But he says he can’t survive 15 years in the harsh Florida sun. Extreme weather also affects homes.

How well you maintain your home can also have a big impact, says Wessling. For example, many homeowners don’t realize that their window caulk dries and cracks, but seepage water can cause extensive damage.

“A $12 or $15 repair can end up costing $15,000 or $20,000 to rebuild the wall under the window,” says Wessling.

Homeowners spent an average of $950 (0.6% of the home value) on home maintenance in 2019, according to the latest U.S. Housing Survey conducted by the U.S. Census Bureau. However, the amount varies greatly depending on factors such as the size and age of the home. For example, maintenance costs as a percentage of home value rose from 0.2% for homes built in the 2010s to 0.8% for homes built before 1960.

decide how much to deposit

Those who prefer to hire others should expect to spend more money than do-it-yourselfers, says Mischa Fischer, chief economist at home services referral website Angi. Her Angi survey of 2,934 homeowners, who paid home repairs last year, found they spend an average of $3,018 on home maintenance, Fisher said. say. These amounts typically ranged from 0.5% to 1% he of the value of the home. Additionally, homeowners spent an average of $2,321 on emergency repairs.

Fisher recommends homeowners set aside up to 5% of their assets. income $10,000 for home maintenance and emergency repairs and system replacement.

Another approach is to save based on the remaining life of various components in your home, such as your roof, heating and cooling system, water heater, and appliances.

Wesling says you can search online for charts and articles that estimate the normal lifespan of components. Doing a similar search will give you an idea of ​​replacement costs.

Or, hire a home inspector to perform a home maintenance inspection, says Wessling. Similar to a pre-home inspection, maintenance inspections can predict when various housing systems will need replacement. Wessling said he charges $500 for the test, which is usually $400.

According to Wessling, a five-year air-conditioning system typically has a lifespan of 15 to 20 years. If the new system costs him $4,000, he will save $400 a year. A fudge factor could be added to account for future inflation, but unfortunately this is unpredictable. Wessling suggests he adds 20% to the expected cost, saving $100 a year.

Other ways to prepare for home expenses

Consider setting up a home equity credit line that you can use if repair costs exceed the amount you save. These lines of credit tend to be cheaper than many alternatives such as credit cards. Please make sure you can pay. If you can’t pay, the lender can foreclose on your home.

Those who are struggling to save may also consider purchasing home securitycan cover repairs and replacements for home systems and appliances, Mieritz says. Her current warranty costs about $800 a year, but each service visit to fix the problem costs her $75.

Such contracts have drawbacks. For example, customers have no control over who performs repairs, and coverage depends on insurance terms. Consumer Reports recommends that people “self-insure” by putting the money they spend on home insurance into a savings account allocated for home repairs or replacements.

But Mielitz, who has been buying home insurance since 2008, says the deal gives him peace of mind at a reasonable cost.

“It’s like car insurance. I hope you don’t need it, but if you do, you’ll get it,” says Mielitz.

State of Home Spending is based on Angi analysis of a survey of 6,400 consumers conducted between October 4-7, 2021. Statistics on home maintenance and repair costs are based on responses from 2,934 homeowners, a nationally representative sample of the housing spending population. .

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