When you settle into your new home after closing day, a whole new journey begins. You’ll have the chance to turn your property into a true home. Along the way, you’ll make plenty of wonderful memories. But it is vital to be ready for the costs that come with homeownership. If you are or plan to become a first-time homebuyer, here are some tips that can help you keep your new home running smoothly.
You already know about your mortgage costs, plus electricity, heating, and other utilities. But you also need to prepare for the unexpected. Things will break down or need to be repaired or replaced over time. All the problems that would have previously been handled by a landlord are now up to you.
This can be intimidating. Luckily, things don’t usually break down all at once!
Still, it's important to start saving up for home maintenance from the start. If you’ve just moved into your home, that could mean putting off renovations until later. It is always better to have some money saved for emergencies. The question is: how much do you need to save?
There’s no way to know exactly how much you’ll spend on home maintenance in a year. But experts agree that you should try to save 1% of your home’s value every year. For a $120,000 home, that would be $1,200. (That 1% doesn’t include closing costs or other fees.)
While 1% is a good place to start, you can save more if your budget allows. Saving up to 4% of the home’s value helps you be ready for anything. It is helpful to keep this money separate from anything else so it doesn’t get spent by accident. You might even open a separate bank account.
In this example, it would be a wise idea to have a savings goal of $100 a month. Most of the time, you will only need to spend a small amount of what you saved. But if your heater stops working, you might end up spending $1,200 on one purchase.
When you bought your home, you probably got a home inspection. A home inspection lets you know if there are major problems with the roof, electric, or sewer system. Sometimes, the home can’t be sold until issues are fixed.
With a clean home inspection, you won’t be making significant changes right away. Over the life of an average 30-year mortgage, though, lots of repairs will come up. Just how long can you count on things like the roof? It all depends on quality and materials, but here are some estimates:
Knowing the age of each part of your home helps prioritize your savings. It’s important to get this information from the seller before closing. It might be impossible to find otherwise. An asphalt roof with 20 years of service might need replacement at any time, while a brand new furnace can last for years.
Some average replacement costs include:
The best way to save money for home repairs is to start with a low-cost mortgage. A low fixed interest rate can save you thousands of dollars over the 30-year life of your home mortgage. Twin Cities Habitat for Humanity’s TruePath Mortgage is an affordable solution for first-time homebuyers. Contact us today or download your First-Time Homebuyer Guide to get started or learn more.
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