In all the excitement of purchasing a new home, many first-time buyers often overlook the maintenance and repair costs that come along with owning a home. If you’ve been renting for years, your rent included any costs associated with repairing a leaking pipe or replacing a refrigerator that stopped working. But when you own your own home, all those costs fall on you.
It’s no surprise that we are fans of savings accounts! Having money stowed away for emergencies is just smart, but when you own a home it’s a must! Here is a short list of some popular and pricing home repairs and their estimated costs:
New Roof –A leaking roof can cause more damage to your home as well. The average replacement cost was $11,095 to tear off and replace a new roof in 2014 for a 2,200- to 2,600-square-foot roof. The price depends on the size of your home. Roofs typically last about 20-30 years depending on the material used.
Hot Water Heater – these typically give no warning before they stop working or burst. It’s a pretty common repair for homeowners and will typically cost about $300 to $900 for a water heater depending on size and type and an additional $250 for installation.
Replacement Windows –. If your windows are drafty, you are likely losing money on keeping your house warm in the Winter and cool in the Summer. But this repair can add up quickly depending on the size and number of windows in your home: between $350 and $500 each, including installation.
Heating/Air Conditioning – you should expect to spend some money on your system each year as routine maintenance is key to keeping things running smoothly for a long time. On average, it costs about $200 – $300 for a tune-up annually. However, a new central air unit could cost you about $5,500 and a new furnace is typically about $5,000. Performing proper yearly maintenance can keep your systems running and save you money in the long run.
Home Exterior – there are several different types of siding you can use for your home that require different maintenance. Vinyl siding, which is typically the cheapest, in the long run, can still cost between $6,000 – $10,000 for a 2200 square foot home. But it lasts for 30 years with little upkeep. However, wood or clapboard siding, while it may look nicer, requires painting every few years, which could cost between $5,000 – $7,000 if you choose not to do it yourself. If you have an older home that has lead paint, the prices can get quite expensive for remediation of that old paint!
You never really know when something will need repairs, so how can you adequately budget for these expenses? There are 2 simple rules many homeowners follow, and yes, it goes back to that savings account!
The 1% rule. A general rule of thumb is to set aside 1% of your home purchase price in a savings account that is strictly used for home maintenance and repairs. This is the minimum amount that’s recommended. If you purchased a house that needs some extra TLC, you should aim for 3%.
Even if you don’t spend that amount each year, you should leave it in the savings account to accrue so that if you have a large repair, like a roof replacement, you have the funds available.
The other rule is the $1 per square foot rule. You set aside $1 for ever square foot of your house to use for yearly upgrades and repair costs. So, if you own a 2,000 square foot home, you would put aside $2,000 per year for repairs. Again, even if you don’t use all the money you put in each year, you should leave it in there to accumulate for larger repairs. One important difference with this rule, is that it doesn’t consider the cost of labor. This rule works better for someone who is handy and can tackle many of the projects themselves.
Vice President, Senior Mortgage Lender
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