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Grain of Salt

When considering either the 1% or the square-footage rule of thumb, it’s important to remember that these are just suggestions. 

Anderson recommended the following repair frequency, based on Porch’s projections:

 Roof replacement:

  • Composition shingles: 12-20 years 
  • Asphalt shingles: 15-30 years 
  • Wood shingles: 20-25 years 
  • Rubber roofs: 30-50 years 
  • Metal roofs: 50-75 years

Home exterior repainting:

  • Wood siding: three to seven years (depending on the climate), four years if stained
  • Aluminum siding: five years
  • Stucco: five to six years
  • New siding materials (such as fiber cement): 10-15 years
  • Brick: 15-20 years

Water heater replacement:

  • Traditional tank water heater: eight-12 years
  • Tankless water heater: 20-25 years

Tip 3: Budget for home improvements

In addition to ongoing maintenance and repairs, you’ll probably want to make improvements to your home over time, such as new carpets, kitchen counters, or windows. You may want to make improvements to your landscape as well. These improvements can make your home more enjoyable and attractive.

A Burst Pipe

Plumbing problems run from those fixed relatively quickly for little to no money to catastrophic and expensive. A burst pipe is squarely in the big-deal category. If this happens, usually due to freezing or corrosion, you need to drop everything, turn off the water supply at your home’s main valve and call a plumber.

Hopefully, you’ll shut off the water before too much damage is done to your walls, flooring, ceiling and furniture. If not, you’ll have a sizable mess on your hands.

Unfortunately, this is extremely costly — up to $4,000 just to clean up the water and fix the pipe. This doesn’t include the cost to repair the damage to the interior and/or exterior of your home, according to Home Advisor.

2. How much should you budget for unexpected home repairs?

There are a couple of rules of thumb that can help guide you when budgeting for unexpected home repairs.

According to the one percent rule, you should set aside at least one percent of your home’s value every year for home maintenance. For a $360,000 house, this works out to $3,600 per year, or $300 per month.

Another good rule of thumb is “saving 10 percent of the total cost of your property taxes, mortgage and insurance payments,” Glink says. “This is probably the minimum amount you should plan for.”

Using this logic, if you make a combined tax, mortgage and insurance payment of $2,000 per month, you should set aside another $200 for home repairs and maintenance.

4. Where should you save money for emergency home repairs?

The best place to save money for emergency home repairs is in a savings vehicle that’s relatively liquid.

“You’re going to need to get at this cash quickly and easily when something happens,” Glink says. “Don’t tie it up into long-term bonds just because you think you’ll earn a little more in interest. Find an FDIC-insured bank account that pays the best rate of interest you can find.”

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Online Savings Discover Bank, Member FDIC

Budgeting for unexpected home repairs and saving that money in a high-interest online savings account has a lot of benefits. You’ll earn interest on your funds while they are parked in your account, and with an FDIC-insured bank, your account will be insured up to the maximum allowed by law if the bank fails. Another online savings account benefit is that you can easily withdraw money when a home emergency pops up.1

“I have a separate online savings account where these funds live,” Lisa says.

Keeping your home repair and maintenance fund in a separate account can help you save money for emergency home repairs by making it more difficult to dip into the funds for an expense not related to its intended purpose.

Where to keep your home repair fund

Both Youngbauer and Boyd agree it’s important to keep your home repair emergency fund handy — which means you should leave the money in cash. You should look beyond brick-and-mortar banks for higher interest rates. Make sure there is FDIC insurance up to $250,000. Boyd recommends high-yield savings accounts like Ally Bank or American Express.

Home Maintenance vs. Home Repairs

When we talk about home maintenance, here’s what’s included:

  • Routine maintenance: Regular services your home needs every few weeks or months (i.e. lawn mowing, preventive pest control treatments, or replacing HVAC filters)
  • Minor repairs: The kind of small, relatively easy fixes a home may need every few months (i.e. fixing a leaky faucet, replacing a cracked tile, or installing a new light switch)

Major home repairs, which are not a part of regular home maintenance, are more unpredictable and far more expensive. These big-ticket home items include things like replacing a water heater, repairing a sinking foundation, or purchasing a new refrigerator because the old one finally gave out. 

Even if you don’t spend your whole home upkeep budget on maintenance every month, it’s a good idea to put any leftover money into a savings account. Then, you aren’t caught unprepared when major repairs pop up in the future — and something will pop up sooner or later. That’s an inevitable part of homeownership. 

Broken Windows

Broken windows are more than unsightly — they’re dangerous. Broken glass can result in serious injury and leave your home exposed to the elements. Another issue is home security. A broken window is an open invitation to a burglar looking for easy access to a home.

If you discover a broken window in your home, take care of it immediately. The cost for this repair? According to Home Advisor’s 2021 True Cost Guide, broken glass repair runs around $350 depending on the type of glass, window and your location. If you need a new window pane, expect to pay between $100 and $700; the national average is $275.

How do you plan for home maintenance?

To plan for home maintenance, keep a close eye on the condition of your home. For example, clean out your gutters regularly and replace your HVAC system filters when dirty. Look for leaks around toilets and sinks and inspect the outside of your home, including the foundation, so see if any cracks or other issues are starting. If you're uncertain of what to do or what condition your home is in, it never hurts to consult a professional.

Tip 1: Set aside money for ongoing home maintenance

Some specialists recommend setting aside 1% to 2% of the purchase price of your home each year for routine maintenance projects such as roofing repairs, sewer updates, or new appliances — each of which can cost several thousand dollars. If 2% seems too much, consider starting with less and working your way up. Finally, if your home has greater maintenance needs, consider whether budgeting more than 2% is necessary.

You probably won’t need to repair everything at once, but it’s a good idea to have money set aside for when problems do arise.

Count the Potential Cost

Once you’ve established the need for budgeting for home system and appliance repairs and replacements, the question becomes how much money should you allocate for potential expenses?  If you’ve been a homeowner for a number of years, one way to plan is to review your home-related repair, replacement, and maintenance expenses for the last several years and calculate an average yearly projection. Then, divide that average by 12 to determine how much of your monthly income you should set aside. If you have online banking, it could be as easy as running a quick report to track your spending habits over a period of time.

Some experts suggest setting aside one to two percent of the purchase price of your home for household maintenance to include unexpected repairs and replacements. So, if you paid $200,000 for your property, you would budget between $2,000 to $4,000 a year or $167 to $335 per month.  Another common way to determine how much money to save for surprise home repairs is to base the amount on the square footage of your home.

With both of these approaches, it’s important to also consider some other factors that might influence how much you’ll need to spend. For example, if you have an older home that hasn’t been remodeled in a while, you may anticipate that more breakdowns will occur with the older systems and appliances and budget up to four percent of your home’s purchase price.  Or, if you have a big ticket item maintenance item that’s looming, such as needing a new roof, you might need to save more in the years leading up to that expense.  Conversely, if your home is new or if it has been recently remodeled or renovated with new systems and appliances, you might save on the lower end of the recommended scale.

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Where should you keep your home maintenance savings?

A standard savings account will work, but you may want to consider options that offer a better return rate so your savings are making you money while they sit. Certificates of deposit (CDs) or IRAs aren’t great for this purpose because they may be hard to pull money from or charge a penalty fee for early access.

Better options include a high-yield savings account or a money market account where you’ll still get a solid return rate, and you can easily withdraw the funds as needed.

What to do if you didn’t budget for a costly repair

Planning ahead, protecting yourself with homeowner's insurance, and budgeting for repairs is the ideal. However, if you're already in your home and find yourself confronted with a major repair that you can't afford, there are still options for you.

For starters, Collins recommends evaluating the repair and determining if it's a DIY solution, or if you need to call on professional services. While there are some projects you probably shouldn't try to tackle on your own—like roofing issues or electrical wiring—you can save money on some projects by researching solutions online and doing your own handiwork. Even if you can't do a repair on your own, Collins suggests researching replacement items or materials and seeing if it would be more cost-effective to buy your own materials, rather than having the professional provide them.

Once you've done some research and evaluated what needs done, Collins recommends looking into government-provided financial assistance to help cover the costs. "Should a major repair be entirely out of budget, there are programs that offer loans to help cover the cost of the repair, such as 203(k) Rehabilitation Mortgage Insurance Program and Section 504 Home Repair Program," she says. She's also a fan of startups like Renofi, which help provide renovation loans based on the future projected value of your home, rather than the current price.

Whether you're planning to buy your first home or are already settled into one, don't leave your finances up to fate. Be proactive and plan for home maintenance and repairs now.

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